One of These Things Is Not Like the Others

not-the-great-depression1Think of this chart (from Donald Marron, via Greg Mankiw) the next time you hear someone say that we are in the worst economic downturn since the Great Depression.  Based on GDP, it appears we’re in the worst downturn since 1958 — and since I was born that year, I reject the idea that it was a long time ago.  If GDP declines by another 20 basis points or so, it then may be technically accurate to talk of the worst decline since the Depression — but the comparison will be no less misleading.

Back in March I highlighted unemployment data showing that the jobless rate was not (yet) as bad as 1982.  With three more months of job losses, we’re getting closer –  the May rate of 9.4% is closing in on 1982’s full-year rate of 9.7%.  But while many economists expect the rate to climb to over 10%, the rate of increase in joblessness has declined for four months in a row, and the job losses announced today were lower than expected. The Great Depression? 25% unemployment.

While we’re on the subject of productivity, if what you’ve just read makes sense to you, consider the possbility that I might be able to help you or your organization meet your communications needs.

3 thoughts on “One of These Things Is Not Like the Others

  1. Perhaps this is too obvious, but everything to the left of the long red bar representing the Great Depression, represent 2 years or less of data. The current recession/depression represents 2 years or less of data, no more data is currently available as it has not yet occurred, however this does not represent any insurance that it will not occur and 2007-2011 could match or exceed the long red bar of the Great Depression.

    This is much like being half way across a crumbling bridge and congratulating yourself on a successful crossing. This is at the least disengenuine if not deceitful. It is not a sin to say we don’t know something.

    The evidence of criminal fraud in the banking and insurance systems is so overpowering that it gives one much reason to suspect the integretity of the government data as a whole. After all, until September of 2008 the government was claiming we weren’t even in a recession, just a “rough patch” whatever that means. This recession has been backdated to 2007 and that occurred in December of 2008.

    While I certainly hope for the best for this economy, I don’t want to invest my future and my fortune on lies and mistatements. I’m referring to the government data and not your fine analysis when I say this. I think you need to put this is a much broader perspective and understand this is not an ordinary financial crisis, this is a generational panic induced by a number of factors, including peak oil, financial fraud and 3 decades of debt based growth gutting the wealth of a nation.

    I think it is too early to do anything but pray and prepare, I have not seen unemployment rates this high in my lifetime, and that is using the “official” rates and not the real rates which seem evident when I travel about the country. The government has never bailed out anyone for the trillions of dollars currently spent, or spent so much money trying to manipulate markets and industries. These alone should be clues to you that more than GDP numbers are needed to understand what is occurring world wide in this crisis.

    I think you are allowing a statistical tree to block your view of the forest.

  2. John Smith, thank you for the thoughtful comment and the civil tone. There’s no question that we’re in a severe downturn, the worst or nearly the worst in my lifetime, and yes, there’s no guarantee that it won’t get worse. The conventional wisdom seems to be that we’re near the bottom now, but that could turn out to be tragically wrong.

    My only point is that based on what we’ve seen to date, we are so far away from the devastation of the 1930s that it is misleading even to mention the current downturn and the Great Depression in the same breath.

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