A Depression doesn't have to be Great — bread lines, rampant unemployment, a wipe-out in the stock market.The economy can sink into a milder depression, the kind spelled with a lower-cased "d."
By one definition, it's a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn't qualify yet: 15 months old and 7.6 percent unemployment. But both unemployment and the 6.2 percent contraction for late last year could easily worsen.
By one definition, it's a downturn of three years or more with a 10 percent drop in economic output and unemployment above 10 percent. The current downturn doesn't qualify yet: 15 months old and 7.6 percent unemployment.
But both unemployment and the 6.2 percent contraction for late last year could easily worsen. The Great Depression retains the heavyweight crown. Unemployment peaked at more than 25 percent. From 1929 to 1933, the economy shrank 27 percent. The stock market lost 90 percent of its value from boom to bust. And while last year in the stock market was the worst since 1931, the Dow Jones industrials would have to fall about 5,000 more points to approach what happened in the Depression.
Despite the tempered optimism, the economic outlook remains grim. Consumer confidence has fallen off the table, stocks are at 12-year lows, layoffs come by the tens of thousands, and credit remains tight. The current downturn has many of the 1930s characteristics, including being primed by big stock market and real estate booms that turned to busts. Policymakers and economists note there are safeguards in place that weren't there in the 1930s: deposit insurance, unemployment insurance and an ability by the government to hurl trillions of dollars at the problem, even if it means printing money.
Hi Ken,
ReplyDeleteA sobering -- if not downright depressing -- entry.
Best,
Marty
I remain optimistic that we will recover from this, but I also believe that 2009 is going to blow. It's not going to be a matter of months, but a matter of years, to experience full recovery. Sad, but true.
ReplyDeleteB.
'even if it means printing money'... THAT amazes me, it doesn't make any sense to me at all... but I'm not the president, so it doesn't have to.
ReplyDeleteWOW! I so agree with Joann about printing money. Now I'm going to go to bed and pull the covers over my head.
ReplyDeleteHugs, Joyce
Very sobering entry. I think what erks me the most about some peoples response to what is going on and their expectations as far as the government "fixing" things... it took 8 years for it to get to this point, Obama isn't going to be able to fix things overnight or bring them to any kind of resolution, it's going to take time and people are going to have to buckle in and hang on for the ride. I hope it's important to be aware that we ARE aware now from more personal experiences than we were just a year ago whether the economy is affecting us personally or someone we know. I don't even know if that makes sense. Does it? Hugs, Teresa
ReplyDeleteThere is also great opportunity in times like this. If you look at some of the worst economic times, some of the most interesting and succesful companies came to light~
ReplyDeleteAs for printing money to throw at the problem, the idea makes me cringe.
Rebecca
Little by little the economy is doing great, it may have been a slow progress but at least there are some improvements let's just hope that this will continue to a full recovery.
ReplyDeleteEconomic Problem