(Short answer - maybe)
A recession is defined as two subsequent quarters of negative growth, and a depression as a recession where the drop in GDP exceeds ten percent. These working definitions, rough as they are, are worth bearing in mind in the months to come. Our political and media elites will try very hard not to use the d-word at all. Canada's Prime Minister, Stephen Harper, already is reluctant to use the r-word, grudgingly admitting we are in a "technical recession."
A real depression seems very likely next year. This is more than a blip in the stock market, this is structural crows coming home to roost. North America has out-sourced almost it's entire manufacturing base, and the last big blue-collar industry, automobiles, is on life-support. It is now abundantly clear that the long boom starting in the nineties was a fever-dream of speculation, a bubble over-due for bursting. The levels of debt, both public and private, are staggering. The US government debt is so enormous that it beggars the imagination as to how it could ever be paid off. Maybe Obama can work a miracle, but it would almost have to be that.
So, let's assume the very likely worst case; a depression next year. What would that mean, beyond the obvious material deprivation? How will a depression affect us politically, culturally, socially, morally, spiritually?
It might be worthwhile to look at past examples; there have been at least three major depressions since the industrial revolution - the 1840's, the 1870's and the 1930's.
The first thing that is obvious is that economic depression fosters political instability both internally and internationally. 1848 was a year of revolution throughout Europe. We are already seeing this happen again in Greece, which might turn out to be the first spark in a general conflagration. The other, and even uglier, form it may take is political extremism and the emergence of charismatic leaders like Hitler. His political movement was a minor nuisance in the 20's and only took off during the depression. The political sphere will require vigilance if sanity and democracy is to be preserved. This is not a bright side, at all, at all.
Cultural and social trends are harder to pin-point, but it would be interesting to research this area. There seemed to be a lot of great writers working in the 30's; Steinbeck, Hemingway, Huxley, Orwell - but was this more than at other times? Tentatively, I would suggest that hard times forces writers to confront the gritty realities of life. There is a hard edge to the writing of the 30's, none of the self-indulgent ennui evident during good times. It might be revealing to make a study of who was writing in the 1840's and 70's as well.
My parent's generation lived through the 1930's and to those of us who grew up in the 60's that older generation seemed hopelessly stuffy and narrow-minded. But in retrospect, and with the advantage of age, one begins to see the wisdom in their cultural norms of peaceful sedate family life. The culture that came out of my generation was at times colourful, to be sure, but was marked by self-indulgence and wasteful hedonism.
My parent's generation had an instinctive horror of debt. They knew where that could lead. If you couldn't afford something, you saved up for it. Nobody "bought on time" which was considered slightly immoral. The 60's kids were too impatient to "save up" and the generations that followed us where even worse in this regard. The huge amount of credit card debt out there is one of the economic time-bombs waiting to go off.
If there is an up-side to depression, this may be it. We may be forced to rediscover old values. The excess of 80's and 90's was already beginning to wear thin, but now we may have no choice but to learn the precious virtue of "contentment-with-little." The insane consumer culture was always unsustainable and spiritually bankrupt, but now it may become impossible very quickly. Instead of diverting the five senses with expensive gadgets, people may have to rediscover the joys of friendship and family, and re-connect with the earth and their own bodies and minds. This is not a bad thing, if it happens.
And there may be a return to reality. The last quarter-century was like a global fever-dream. I imagine the mood was much the same in the last period of big-head building on Easter Island. Deep down, we all knew it couldn't go on forever. We could not keep consuming the Earth's resources to fuel a mad economy based on consumer spending. The stock market could not continue to go up forever, based on nothing but tulip-bulb speculation. But as long as times were good, we could pretend these were tomorrow's problems. Well, wake up and smell the coffee, tomorrow's here already, I can hear the cock crowing.