Monday, September 15, 2008

Economic Conditions: Not Even Close to The Great Depression, We're A Nation of Exaggerators

In the past two months, this newspaper alone (Washington Post) has written no fewer than nine times, in news stories, columns and op-eds, that key elements of the economy are the worst they've been "since the Great Depression."

It's a virus -- and it's spreading. Do a Google News search for "since the Great Depression," and you come up with more than 4,500 examples of the phrase's use in just the past month.

But that doesn't make any of it true. Things today just aren't that bad. Sure, there are trouble spots in the economy, as the government takeover of mortgage giants Fannie Mae and Freddie Mac, and jitters about Wall Street firm Lehman Brothers, amply demonstrate. And unemployment figures are up a bit, too. None of this, however, is cause for depression -- or exaggerated Depression comparisons.

This would suggest that anyone who says we're in a recession, or heading into one -- especially the worst one since the Great Depression -- is making up his own private definition of "recession." And probably for his own political purposes.

~Don Luskin in yesterday's
Washington Post

MP: See chart above of annual unemployment rates back to 1930 (August unemployment rate for 2008), showing that the average jobless rate in the 1930s was 17.1%, much, much higher (almost 3X higher) than the current rate of 6.1%. Any comparisons of today's economy to the economic conditions of the Great Depression are surely largely exaggerated.

24 Comments:

At 9/15/2008 8:29 AM, Anonymous Machiavelli999 said...

"Economic Conditions: Not Even Close to Great Depression"

So far...

 
At 9/15/2008 9:07 AM, Anonymous Anonymous said...

So, uh, rethinking this post yet?

 
At 9/15/2008 9:15 AM, Anonymous Venkat said...

Population in 1930's in US: 122 mill
Unemployment rate: 17%
Total Unemployed: Around 20 million

Population of US in 2008: 305 mil
Unemployment rate: 6.1%
Total unemployed: Around 18 million.

 
At 9/15/2008 10:15 AM, Blogger Walt G. said...

Definition of a recession is when your neighbor does not have a job. Definition of a depression is when you don’t have a job.

Venkat:

You can spin those numbers and state that the number of unemployed people today is only 11% less than experienced during the height of the Great Depression :) I can see that as a campaign slogan already.

 
At 9/15/2008 10:26 AM, Anonymous QT said...

Walt g,

Apparently, people have forgotten what a depression looks like. These are only a few of the thousands of photographs of the Great Depression.

A Ken Burns' documentary stated that 1/3 of all of the private assets of the state of Georgia came on the auction block in 1933 at the height of the Great Depression.

Anyone who thinks that the present problems are a fraction of the misery that was experienced during the 1930s needs to take a refresher in U.S. 20th century history.

 
At 9/15/2008 10:47 AM, Blogger Walt G. said...

qt,

I am the product of two parents who grew up during the depression. I still can't leave a room without turning the lights off :)

I agree with you that we are nowhere near a depression. But perceptions often cloud reality, and the media are no help--especially during a presidential election year. I don’t want to go so far as to label the public a bunch of whiners; however, people must adapt to change and deal with the situation as it is and not as they want it to be.

Times of change, such as now, are not unprecedented in history. These times are always followed by times of prosperity. Along this continuum, a lot of the prosperity we already enjoy is taken for granted. I know that I don’t want to go back to the 1960s. I like my 2000s comforts too much for that.

 
At 9/15/2008 11:07 AM, Anonymous QT said...

Walt g,

I also had parents who grew up in the Depression :)

With regard to unemployment, one must also consider that the workforce participation rate today is substantially greater than it was 70 years ago. Labour statistics give
some idea although they only go back to 1948.

 
At 9/15/2008 11:46 AM, Anonymous Anonymous said...

This post on Don Luskin is a must read.

The guy is probably the worst economic commentator in the United States in terms of the accuracy of his predictions.

Why would you cite someone so patently incompetent?

 
At 9/15/2008 11:47 AM, Anonymous Anonymous said...

wow, conditions are still superior to those of the great depression. Definitely the benchmark of a great empire.

 
At 9/15/2008 12:24 PM, Blogger Bubba said...

"Why would you cite someone so patently incompetent?'

For starters, the inherent truth contained in it drives people like you crazy.

 
At 9/15/2008 12:45 PM, Anonymous qt said...

Anon.

You have not refuted the argument presented by Luskin but merely tried to discredit Mr. Luskin. By contrast, Venkat at least presented unemployment numbers.

This form of argumentation is known as ad hominem.

 
At 9/15/2008 1:56 PM, Anonymous qt said...

Anon.

There are in fact lots of ways to contest Liskin's article.

You could also look at the claim that there are 4500 news items using the phrase "since the Great Depression". Luskin's article also comes up using this search.
It isn't the comparison that is at issue but that the media are making claims that the economy is as bad or worse than the depression. Searching Google News for the phrase "worst since the Great Depression" produces only 1,429 items (68% less items).

The Great Depression remains the most significant downturn in U.S. history. Is it any wonder that references to this seminal event come up when there is a downturn, a precipitous drop in the stockmarket drop or problems in the banking industry. This event dominated public policy for the next 60 years. One could argue that comparisons to the Great Depression reflect the importance of this event in U.S. history.

Political candidates are well known for high blown rhetoric. John Kerry also made comparisons to the Great Depression in the last election. How many other presidential candidates have used comparisons to the Great Depression? A bit of research might reveal that Senator Obama's remarks are fairly typical.

There is more than one way to skin a cat. :0

 
At 9/15/2008 4:32 PM, Blogger juandos said...

"The guy is probably the worst economic commentator in the United States in terms of the accuracy of his predictions"...

Can you folks just smell the B.S.?

From the site anon linked to: I'm a New York City resident in my early forties, an investment professional, and a lifelong conservative. I have an M.B.A. in International Business from Columbia University....

ROFLMAO!

From New York, went to Columbia and is a life long conservative?!?!

Now there's a stunning turn of events...

Oh yeah, the info posted there is questionable at best given the lack of context...

Dang! I wished I had been wearing my fishing waders before I cruised over to that site...

 
At 9/15/2008 4:49 PM, Anonymous QT said...

Juandos,

You should know better than to go on the internet without fishing waders! :)

Isn't subjecting Saint Obama's remarks to the "truth in advertising" guidelines the real issue with this article. Apparently, the sun does not rise and set on Senator Obama.

 
At 9/15/2008 10:23 PM, Anonymous Anonymous said...

So are you still denying that the economy is in a recession (ie. that this period in time will retrospectively be declared a recession by the NBER)?

 
At 9/15/2008 10:38 PM, Anonymous Anonymous said...

Unemployment rates from 1930's and today are not calcuated the same way. Today's unemployment figures only report people receiving unemployment benefits - not the millions that are no longer eligible for unemployment benefits. 1930's rates were based on census of people out of work. Can you find real numbers for people that are really unemployed or under-employed?

 
At 9/15/2008 11:33 PM, Blogger OBloodyHell said...

> Anyone who thinks that the present problems are a fraction of the misery that was experienced during the 1930s needs to take a refresher in U.S. 20th century history

True, but before they can do that, they need to visit their proctologist, so they can get their head removed from their...

:-/

Anyone who thinks this is even as bad as the ***1970s*** (so far) is a complete idiot for thinking they even know enough to have an opinion worthy of expression.

> So, uh, rethinking this post yet?
Anon 9:07, the above means *you*.

> I don’t want to go so far as to label the public a bunch of whiners

Walt, the public isn't, but the libtards and the MSM are.

> wow, conditions are still superior to those of the great depression.

Wow, you can speak with your head that far up your ass? Definitely the hallmark of a tremendously noteworthless fool.

"Conditions are FAR superior..." is the appropriate "nuance", CRIS sufferer.

> The guy is probably the worst economic commentator in the United States in terms of the accuracy of his predictions.

If you have this opinion, then you are citing clear evidence of my assertion above.

I do note this on your Luskin quote-listing link:
> January 18, 2008: I admit that I've been very wrong. I've been saying to buy stocks all the way down since the October highs. I was wrong. I repeat: I was wrong.

...A lot more than I've EVER seen any poncey idiot on the Left ever say --

"On the Surge: I was wrong. I repeat: I was wrong"? Nope. (Q.E.D.)

"On this being a recession: I was wrong. I repeat: I was wrong"? Nope. (Still haven't had two successive quarters of negative GDP yet)

"On the situation in Iraq being hopelessly lost: I was wrong. I repeat: I was wrong"? Nope. (Q.E.D.)

"On Bush being an obvious idiot: I was wrong. I repeat: I was wrong"? Nope. (Read This. He may be inarticulate, but stupid? Like a fox)

"On Obama having the experience needed to run the country: I was wrong. I repeat: I was wrong"? Nope. (The continuing hysterical flailing and gabbling of his campaign make it doubtful if he could run a convenience store in the face of *unexpected* events. The man clearly does not know how to handle any form of adversity or surprise)

 
At 9/15/2008 11:46 PM, Blogger OBloodyHell said...

> This event dominated public policy for the next 60 years.

qt, it still does.

The S&L's (as in the "S&L Crisis") were a Depression-era creation.

Fannie-Mae and Freddie-Mac -- Depression-era creations (or results thereof).

The failing Social Security Ponzi scheme? A Depression-era creation. We haven't even touched this one yet.

Incompetently designed and supervised Big Gummint programs, the legacy of FDR (and the Depression) that just keeps on giving.

> There is more than one way to skin a cat. :0

"Wrap it around anonymous' pecker"?

> So are you still denying that the economy is in a recession

LOL, I will ack it as a recession when the indicators SAY it's a recession. Putting the cart before the horse, this I leave to idiot libtards with axes to grind.

And since the apparent only thing turning it towards a recession appears to be something created by Democrats and screwed up by Democrats, you'll pardon me if I don't blame any majot aspect of it on the current admin or party thereof...

Well, *you* won't pardon me, but I'll laugh at your ignorant, stupid whining anyway...

 
At 9/15/2008 11:50 PM, Blogger OBloodyHell said...

> Can you find real numbers for people that are really unemployed or under-employed?

Go ahead. You're the one making the claim.

(I suspect you're right, that it is, indeed, higher than 6%, I'll give you that much -- but far, far lower than 17%)

My guess, not over 9% are unemployed and actually desire work (i.e., a non-working housewife who has no interest in seeking a job doesn't count).

 
At 9/16/2008 10:00 AM, Anonymous QT said...

OBH,

"It still does"

Got to agree with you there.

 
At 9/16/2008 2:28 PM, Anonymous Anonymous said...

I feel sorry for your students, especially if you're using Don Luskin as a reference.

Yeah... Hey guys! It's not as bad as the great depression! The fundamentals of our economy are strong!

 
At 9/16/2008 2:40 PM, Anonymous Anonymous said...

Hey Perry, are Don Luskin and Phil Gramm your good friends?

 
At 9/16/2008 11:40 PM, Anonymous QT said...

Anon.

More ad hominem...trying to discredit your opponent by association. How predictable!

What amazes is that you still seem to think that you are hitting paydirt when you never even touch the argument. How funny is that?

If you can't dispute Don Luskin's ideas by force of argument (ie. prove his arguments don't hold water or are just plain bollax), how can anyone take the petty jibs against CD & Mark Perry seriously?

Even when I suggest possible ways to disprove Luskins's assertions, you still don't get it. The point is not who said it but WHAT was said.

Ok, so you don't like what he said. So deconstruct the argument, and refute his claims.

I thought university was supposed to teach people how to think. How hard is this?

 
At 9/19/2008 6:24 AM, Anonymous Anonymous said...

i grew up with depression era (in UK) parents too. always switch lights off close doors. Also remember the 1970's when we had no electric 3 days a week. We grew up "green" before it became politically correct.I admit i moved here to make more money. I soon realised it was a land of waste and greed, that i easily got caught up in. Recession/depression or a reality check? WHAT created the arrogance in people that they though nothing will change we will mortgage ourselves to the hilt, live on credit cards and never think about 'what if one of us loses a job'..'no we will not think about that we will just start breeding instead'Like a throw back to 1950's jonesing mentality-basically averice
unemployment is way higher than 6%-that does not account for those who have used up benefits,then their savings and maybe just have given up.I had a good professional run in the US, but now find i take what i can, never expect it to last.This is NOT the america i moved to. Richest nation in the world or not, the 21st century is not about america. It took the british a long time to get over their empire arrogance too.Then they just adopted the worst american habits, mainly excessive use of credit.

 

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