If every country is in some sort of recession, shouldn’t the economy adjust accordingly as opposed to falling even more?
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It is hard to explain because this was almost a different era in terms of economics, finance and trade.
Prior to the Great Depression, there was a (ELI5) loose organization of banks and almost zero monetary policy control by the government. Banking was not a “global” affair that it is today. Basically each regional bank ran independently and this made them vulnerable to bank runs. Once a bank had a problem, this could easily lead to contagion where more and more banks became illiquid as depositors rushed to pull out their savings – there was no FDIC etc to backstop depositor’s money. Since banks were unregulated any single large bank having problems could systemically spread quickly without any formal mechanism to stop it.
This kind of system is prone to severe boom and bust cycles. And since banks and credit are crucial for manufacturing and trade, this means that it amplifies throughout the economy. So there tended to be periods of great wealth creation and economic expansion followed by periods of deeper recessions.
Modern economies are better regulated and banks are held to tighter standards. Central banks are now almost always under the control of the central government. Things like deposit insurance etc are now mostly universal. These are almost all “new” in the sense of it developing in the 1930s many of them after WW2.
They are not, of course, immune from asset bubbles (as 2008 will attest to) but the system is nowadays generally a lot more robust and stable.
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