Earlier today, CNN/Opinion Research Corp. released results of a poll of 1,000 Americans in which 60% said they feel an economic depression is “very likely” or “somewhat likely.”
That’s depression. As in, massive unemployment and years of a falling U.S. economy.
It doesn’t surprise me that people are scared enough to believe there’s a depression lurking in the shadows. My friend, Jeff Jarvis says this episode of This American Life will have you standing on the ledge. I’m too afraid to even download it.
I’ve written over the past few days about why I believe nothing is more natural than for us to believe everything is going to hell in a handcart.
But let’s at least note that, while the U.S. has averaged a recession about once every 10 years — and we’re due one, it’s unlikely that we’ll have an economic collapse of the nature that is defined by the word depression.
A couple of metrics to consider when you measure a bad economy is GDP (economic output) and unemployment. Now, let’s review the numbers.
During the last U.S. depression, unemployment hit 25%.
We’re currently at 6.1% and during the past 60 years, the unemployment rate has gone over 10% only once, a 10-month period in 1982-83, during which it topped out for two months at 10.8%. Even pessimistic economists are not suggesting much higher than 7% for the current economic downturn. [Source])
During the last U.S. depression, the country had four straight years of dramatic GDP contraction.
Last depression: In 1930, -12%; 31, -16.1%; 32, -23.2%; and 33, -4% [based on current dollars, Source: XLS spread sheet])
In 2007, GDP grew 2%. The last “negative growth” was in 1991, -.2%. [Source: IBID]
One more thing to be aware of when considering the “D” word: One of the leading experts on the history and causes of economic depressions is a former Princeton University professor with a PhD from MIT. Today, he is perhaps the one person in the U.S. who has the most power to do something about preventing a depression: Ben Bernanke. (Later: More on Bernanke’s background.)
More later from the land of the rose-colored glasses.
Bonus link: An 18 month old “answer” by MSNBC’s John Schoen to the question, “Are we headed for a depression?” It includes some good historical context.
Oh, and another thing: I’ll admit that it’s hard for me to be down beat when Vanderbilt and the Tennessee Titans both have a 5-0 seasons.