Monday, May 11, 2009

Great Depression II. Not.

Between 1931 and 1940, the MINIMUM monthly unemployment rate was 11% in July 1937, and the average jobless rate was 17.3% (see chart above). It seems very likely that the MAXIMUM unemployment during the current recession won't reach the MINIMUM of 11% during the Great Depression.

According to the Philadelphia Federal Reserve Survey of Professional Forecasters (
released February 13, new survey is due out this Friday), the average unemployment rate expected for 2009 is 8.4% and the average forecast for 2010 is 8.8%. Obviously these forecasts will be adjusted upward this Friday, but it still seems probable that the jobless rate in this recession won't even reach the minimum monthly rate of the 1930s, and certainly won't come anywhere close to the 17.3% average jobless rate during the Great Depression.

For a related analysis, see Freakonomics post "
This is Not Another Great Depression"

Note: Unemployment insurance didn't exist until 1935.


At 5/11/2009 9:30 PM, Blogger Wesley R. Gray said...

you are comparing apples to oranges. If I remember correctly, the u6 unemployment numbers we have today are more equivalent to the unemployment numbers reported in the great depression (measure has changed over time)...u6 is hovering around 16% right now. Anyway, your point is clear, but not as clear-cut.
who knows. nice post nonetheless

At 5/12/2009 2:36 PM, Anonymous Anonymous said...

Not only is Mr. Gray correct, but there's some valid arguments that the real u6 is closer to 20% (Shadow Stats makes one such argument).

Also, a chart that compares to 1931 to 2000 is terribly misleading. As a "crisis", we need to compare 2009 to 1930 or 1931, not to 1941.

The real danger here IMHO is that our Illustrious Leaders are using the Great Depression and Japan's 2000 Depression as a how-to guide. "We just aren't acting fast enough." Bah, humbug.


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