Are We Experiencing A Second Great Depression?

My wife and I had dinner with my grandmother not too long ago. During the course of our meal, she asked me how business was going. I told her that things were good for us, but that a number of friends and clients were experiencing tough times.
 
Then she said, "I think we are in a depression."
 
At 92 years old, my grandmother has a particular understanding of the word "depression" that most of us cannot fathom. It means struggle, fear, and broken dreams on a gigantic scale.
 
As I responded over dinner, I don't think we're headed into a depression. Though bad, the numbers I see simply do not suggest that level of decline. 
 
But what if my grandmother is right?  What if we are in the middle of a prolonged economic downturn -- a Second Great Depression? 
 
We have to remember that after declining in the 1930s our economy grew like crazy (in real dollars). To be sure, the economy had ups and downs during those subsequent years.  But it's no exaggeration to say that America was the most prosperous country on Earth after the Great Depression.
 
Why was that? 
 
I believe that our country has thrived over the last 60+ years primarily because of certain competitive advantages. Chief among those was (and is) the ingenuity and perseverance of our people. Another advantage was (and is) the wonderful reality that in America a person can more fully reap the rewards of the intelligent risks they take.
 
No economic slump -- not even a Great Depression -- can by itself eliminate these competitive advantages. A free country full of creative and industrious people incentivized to take smart risks is hard to keep down.
 
In my view, the only thing that could dim a bright future for us is our own panic and overreaction. That's because fear could lead us to adopt "solutions" that actually make the problems worse. Although effective public policy certainly has an important role to play, I don't think it will be the primary cause of recovery. (In fact, bad public policy could be the primary cause of the next downturn!) 
 
As a small business owner who feels the ebb and flow of our economy quite acutely, I worry more about the long-term burdens and disincentives created by politicians than I do about whether America has the "stuff" to rise again.
 
What do you think?