Thursday, May 28, 2009

Not the Great Depression

Since the beginning of this economic crisis last October, I had the impression that the general doom and gloom and the many comparisons with the great depression were somehow overdone. Finally I've seen the picture that says a thousand words on the topic.

The chart was created by Donald Marron, a one time director of the US Congressional Budget Office. I'd say that gives him some credibility. The picture is dramatic showing a 3.6% decline in real GDP from mid 2008 to the second quarter of 2009. That's a long way from the 29.3% drop seen during the great depression.

The dire economic news, including massive job losses and big declines in housing prices are certainly no fun. I'm ready for a turn around any time now, but whatever we're going through right now, it's certainly nothing like the great depression.


BillM said...

Notice that all the small losses are for a ONE year period.

Notice the big loss was for a FOUR year period.

If you break it down you will see a recovery in 1930 but the real bad stuff kicked in after that. That is what we may (probably will) experience this time.

Scott Merrithew said...

Great chart. And Bill is right about the signs of recovery in 1930. If not for the politically motivated New Deal that established FDR as one of the liberals favourite all-time presidents, the great depression would have been just a 1 year recession. Instead the massive interference of government in what was really a market correction, made the situation far worse.
Unfortunately, that bit of history has been misrepresented by the corrupt, and ignored by the willingly blind. As a result, we are all doomed to repeat it as today's feeble minded leaders employ the same bankrupt thinking in 2009.
I am being kind to call them feeble minded. There is evidence to support the notion that in fact, they are knowingly and intentionally engineering the collapse of the market economy, to herald in the new socialist republic in which the central government is in control. The platitudes uttered by Obama's teleprompter are lovingly designed to convince us that our hope is based on nothing less than Obama's plans and righteousness.
It looks like a lot of people are buying it.