Another Great Depression... Not

by: Mark J. Perry

Do a Google search for the phrase "since the Great Depression" and you'll get about 33,605 hits just from news reports, and 2.5 million hits on Google overall. But there are some major differences between now and the 1930s including:

Updated (thank to Michael Gordon): The money supply was decreased by 1/3 during the 1930s (the "Great Contraction"); there was no FDIC, unemployment insurance or Social Security in the early 1930s; and Congress raised taxes and imposed tariffs so high that world trade basically stopped, just to name a few differences.

The charts below illustrate some other differences.

We're nowhere close to the number of bank failures of the 1930s, when banks were failing at an average rate of almost 1,000 per year.

We're nowhere close to the 17.1% average unemployment rate of the 1930s.

On a per capita basis, real GDP is 7.6 times higher today than in 1932.

Food, clothing and shelter consumed about about half of disposable income in the 1930s, compared to only about 1/3 today.