Today's Situation: Not a Great Depression

Since President Bush declared that if the Congress does not give Secretary Paulson the $700 billion blank check, “the sucker could go down!” the talks of another Great Depression have filled the airwaves.

So how much does today resemble the Great Depression that lasted from 1929 to 1933?

It doesn’t take a lot to bring together data from various government sources to present a comparison in the table below.

Granted, the situation today could get a lot worse before getting better, but it simply does not resemble the Great Depression. However, the stock market already has priced in half the chance of that.

Did President Bush and Secretary Paulson scare us so much, we not only handed over the $700 billion blank check, but we peed our pants as well?
 

Comments

[carey_jim:]

Your statistics are reasonable but don't tell the whole story.

First, real unemployment is much worse than 6%
Second, GDP growth was fine in 1929 but we don't know what it will look like in 2009 if the slow motion crash picks up speed.
Third, exports went way down in the 1930's because protectionism became the official policy of most countries. That could return in the future also (think of China, Japan and Korea.)
Fourth, your inflation number reflects the last few years but not the possible near future where real estate prices (and possibly) stock prices are down by 30-50% or more.

You are looking at a fast moving picture through a snapshot taken a few months ago, I think.

2008 Oct 10 11:35 AM

[John Lounsbury:]

By September, 1930 (one year after the 1929 top) the metrics you cite were much closer to the values for 2008 than what you quote for 1932. You have not made a valid comparison.

Do you intend to speculate what the current economy will look like two years from now? That would be a valid comparison to 1932.

2008 Oct 10 12:32 PM

[carey_jim:]

In 1930, THEY didn't have television.

WE have the CNCB finance report.

THEY had Babe Ruth but WE have Babe Bartiromo.

And WE have a CNBC team of at least 6 very pretty women and 6, well, er, uh geeky (?) looking guru men talking the markets up.

The rumors of the death of capitalism are exaggerated and highly voluble.

2008 Oct 10 09:31 PM

[herc:]

We are looking at a number comparison between two completely unrelated economic meltdowns. What some of these so called experts continue to do is use "technical" analysis to parallel the downturn to some of the past experiences. You can play it down all you want, because it certainly does not resemble the Great Depression. It's worse. At least, it will be. As long as Bernanke keeps using his printing press to "bail out" the banks, we are going to be in for a long, steep ride.

We need to bite the bullet, and realize that overconsumption and underproduction were eventually gonna bite us in the ass. it's happening. Let the market run its course.

2008 Nov 12 12:32 PM