Post by AztecWilliam on Mar 23, 2020 12:08:35 GMT -8
Will we have another Depression? I think it's possible but not probable. However, we surely cannot shut down the economy much longer without everything going to hell.
When did the Great Depression begin and when did it end? Well, the year 1929 is usually given as the start, but what about the end? Frankly, I believe that that question is a bit harder to answer. Many would say that World War II ended the Depression. But that is a bit vague.
While the U.S. was not officially in the war until Pearl Harbor, we started rearming in the late 1930s. Indeed, planning for the critical Essex class aircraft carriers and the Iowa class battleships was underway in 1938. Planning for the 175 Fletcher class destroyers began in '39. Also, the Draft was begun in 1940, as well as other key defense measures. So when the economic impact of WWII began is a bit hard to pin down.
Looking at the facts, I believe one can make a case that the Depression did not fully end until the year I was born, 1942. (No linkage between the two implied.
)
Anyway, here is a year by year chart of U.S. unemployment, GDP rate, etc. from '29 to '60. www.thebalance.com/unemployment-rate-by-year-3305506
Several things caught my eye.
* First, unemployment averaged 17.6% eleven straight years, from 1931 through 1941.
* Four straight of those years ('32 through '35) the average was 22.5%!
* Although 1941 is virtually never thought of as a Depression year, unemployment was still just a tick under 10%! (And that, I feel obliged to point out, was after almost eight full years of FDR's efforts to revive the economy.)
* GDP, despite horrendous unemployment, did rise in seven of the eight years, '33 through '41.
Observations:
First, the actions of the Hoover administration were counter-productive.
Second, there was a really bad economic downturn in late '37 and into 1938. The chart below does not note that. Likewise, the chart does not note that in 1958 there was a pretty bad recession. That one I remember well.
Yes, the current situation is bad and could get a whole lot worse. Still, it's unlikely that the unemployment rate will rise to anywhere near the early '30s levels. Unemployment has not hit 10% since 1982. (It came very close to 10% in the Great Recession.)
That rate of 9.9% in '41 is really shocking! Just shows how bad the Depression was. (By the way, the Dow Jones index did not fully recover until 1954!)
********************************************************
Unemployment Rate (as of Dec.)
GDP Growth
Inflation (Dec. YOY)
What Happened
1929 3.2% NA 0.6% Market crash
1930 8.7% -8.5% -6.4% Smoot-Hawley
1931 15.9% -6.4% -9.3% Dust Bowl
1932 23.6% -12.9% -10.3% Hoover's tax hikes
1933 24.9% -1.2% 0.8% FDR's New Deal
1934 21.7% 10.8% 1.5% Depression eased thanks to New Deal
1935 20.1% 8.9% 3.0%
1936 16.9% 12.9% 1.4%
1937 14.3% 5.1% 2.9% Spending cuts
1938 19.0% -3.3% -2.8% FLSA starts min wage
1939 17.2% 8.0% 0% Drought ended
1940 14.6% 8.8% 0.7% U.S. draft
1941 9.9% 17.7% 9.9% Pearl Harbor
1942 4.7% 18.9% 9.0% Defense tripled
1943 1.9% 17.0% 3.0% Germany surrendered at Stalingrad
1944 1.2% 8.0% 2.3% Bretton Woods
1945 1.9% -1.0% 2.2% War ends. Min wage $0.40
1946 3.9% -11.6% 18.1% Employment Act
1947 3.6% -1.1% 8.8% Marshall Plan negotiated
1948 4.0% 4.1% 3.0% Truman reelected
1949 6.6% -0.6% -2.1% Fair Deal; NATO
1950 4.3% 8.7% 5.9% Korean War; Min wage $0.75
1951 3.1% 8.0% 6.0% Expansion
1952 2.7% 4.1% 0.8% Expansion
1953 4.5% 4.7% 0.7% Korean War ended
1954 5.0% -0.6% -0.7% Dow returned to 1929 level
1955 4.2% 7.1% 0.4% Unemployment fell
1956 4.2% 2.1% 3.0% Min wage $1.00
1957 5.2% 2.1% 2.9% Recession
1958 6.2% -0.7% 1.8%
1959 5.3% 6.9% 1.7% Expansion
1960 6.6% 2.6% 1.4% Recession
When did the Great Depression begin and when did it end? Well, the year 1929 is usually given as the start, but what about the end? Frankly, I believe that that question is a bit harder to answer. Many would say that World War II ended the Depression. But that is a bit vague.
While the U.S. was not officially in the war until Pearl Harbor, we started rearming in the late 1930s. Indeed, planning for the critical Essex class aircraft carriers and the Iowa class battleships was underway in 1938. Planning for the 175 Fletcher class destroyers began in '39. Also, the Draft was begun in 1940, as well as other key defense measures. So when the economic impact of WWII began is a bit hard to pin down.
Looking at the facts, I believe one can make a case that the Depression did not fully end until the year I was born, 1942. (No linkage between the two implied.
)Anyway, here is a year by year chart of U.S. unemployment, GDP rate, etc. from '29 to '60. www.thebalance.com/unemployment-rate-by-year-3305506
Several things caught my eye.
* First, unemployment averaged 17.6% eleven straight years, from 1931 through 1941.
* Four straight of those years ('32 through '35) the average was 22.5%!
* Although 1941 is virtually never thought of as a Depression year, unemployment was still just a tick under 10%! (And that, I feel obliged to point out, was after almost eight full years of FDR's efforts to revive the economy.)
* GDP, despite horrendous unemployment, did rise in seven of the eight years, '33 through '41.
Observations:
First, the actions of the Hoover administration were counter-productive.
Second, there was a really bad economic downturn in late '37 and into 1938. The chart below does not note that. Likewise, the chart does not note that in 1958 there was a pretty bad recession. That one I remember well.
Yes, the current situation is bad and could get a whole lot worse. Still, it's unlikely that the unemployment rate will rise to anywhere near the early '30s levels. Unemployment has not hit 10% since 1982. (It came very close to 10% in the Great Recession.)
That rate of 9.9% in '41 is really shocking! Just shows how bad the Depression was. (By the way, the Dow Jones index did not fully recover until 1954!)
********************************************************
Unemployment Rate (as of Dec.)
GDP Growth
Inflation (Dec. YOY)
What Happened
1929 3.2% NA 0.6% Market crash
1930 8.7% -8.5% -6.4% Smoot-Hawley
1931 15.9% -6.4% -9.3% Dust Bowl
1932 23.6% -12.9% -10.3% Hoover's tax hikes
1933 24.9% -1.2% 0.8% FDR's New Deal
1934 21.7% 10.8% 1.5% Depression eased thanks to New Deal
1935 20.1% 8.9% 3.0%
1936 16.9% 12.9% 1.4%
1937 14.3% 5.1% 2.9% Spending cuts
1938 19.0% -3.3% -2.8% FLSA starts min wage
1939 17.2% 8.0% 0% Drought ended
1940 14.6% 8.8% 0.7% U.S. draft
1941 9.9% 17.7% 9.9% Pearl Harbor
1942 4.7% 18.9% 9.0% Defense tripled
1943 1.9% 17.0% 3.0% Germany surrendered at Stalingrad
1944 1.2% 8.0% 2.3% Bretton Woods
1945 1.9% -1.0% 2.2% War ends. Min wage $0.40
1946 3.9% -11.6% 18.1% Employment Act
1947 3.6% -1.1% 8.8% Marshall Plan negotiated
1948 4.0% 4.1% 3.0% Truman reelected
1949 6.6% -0.6% -2.1% Fair Deal; NATO
1950 4.3% 8.7% 5.9% Korean War; Min wage $0.75
1951 3.1% 8.0% 6.0% Expansion
1952 2.7% 4.1% 0.8% Expansion
1953 4.5% 4.7% 0.7% Korean War ended
1954 5.0% -0.6% -0.7% Dow returned to 1929 level
1955 4.2% 7.1% 0.4% Unemployment fell
1956 4.2% 2.1% 3.0% Min wage $1.00
1957 5.2% 2.1% 2.9% Recession
1958 6.2% -0.7% 1.8%
1959 5.3% 6.9% 1.7% Expansion
1960 6.6% 2.6% 1.4% Recession