Are we in a 1930's-style depression?

[Better Believe It]

Are we in a depression?
by Money Staff
August 25, 2010

The U.S. is in a 1930s-style depression, say Gluskin Sheff economist David Rosenberg and other bad-news bears of today's economic malaise.

Rosenberg notes that the Great Depression also had its high points, with positive reports and even some healthy stock market gains.

But those signs, like the occasional bright spots of today, masked an ugly truth. Rosenberg calls current conditions "a depression, and not just some garden-variety recession."

"We may well be reliving history here," Rosenberg writes. "If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Mike Shedlock of SitkaPacific Capital Management, writing today for Seeking Alpha, takes a long look at an article from the Jerome Levy Forecasting Center discussing the concept of a "contained depression," which Levy defines as "a long period of substandard economic performance, chronic financial problems, and generally high unemployment" likely to last about 10 years.

While Shedlock disagrees with parts of the Levy article, he writes: "I like the concept of a 'contained depression.' We are certainly in a depression. However, 40 million people on food stamps as of August 2010 masks that depression. . . . For comparison purposes, there (were) just over 11 million on food stamps in 2005."

Shedlock continues through the Levy article, taking it apart point by point, finding some disagreement but ultimately conceding that its conclusions are basically on track.

Read the full article at:

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1796914&_blg=1,1796914

Shedlock's stats on the number of people receiving food stamps is inaccurate. In 2005 the monthly average of people on food stamps was 25,718,000. In May 2010 the number is 40,801,392. That's a 60% increase in just five years! BBI

[valerief]

1. Yeah, but without the good music. nt

[zipplewrath]

Forget words, talk numbers

In 3, 5 and 10 years where will we be?

I'm concerned that in 10 years we'll still be at 6% unemployment, the DOW will still be below 15,000 and housing prices will be roughly where they were 5 years ago. In 3 years we'll be substantially where we are right now.

[SheilaT]

2. It's really hard to say.

Mainly because there's an awful lot that's very different today from the 1930's.

I think one important thing is the presence of women in the workforce. Back then, almost no married women worked. Today a large percentage of them do. Or did. or want to. All depending on who has lost what jobs. If one member of a two-paycheck family loses a job, there's at least the other paycheck. If the only wage earner (or both in today's economic set-up) loses the job, there's nothing coming in. There was no unemployment compensation in the Great Depression. We have it today, and it's been extended to an amazing degree. We also have Social Security, and I understand from what I read that quite a few people are collecting SS years ahead of when they'd intended because of inability to find new work.

Something else that I've often pondered. When the stock market crashed in October of 1929, no one had any idea at all how long the hard times were going to last. Same thing now. We have no idea how long this will go on. It is always so different to be living through something, than to be looking back after it has ended.

You see this kind of thing in novels set any time before the end of the Civil War. Afterwards they are written with the full understanding that slavery will end. One of the reasons Uncle Tom's Cabin is so powerful is that it was written a decade before the start of the Civil War, and even though the author clearly thinks that slavery is awful and should come to an end, there's absolutely no sense or even much hope that it ever will. Contrast that with something like Gone With the Wind in which slavery is depicted rather benignly, with the kindly white owners treating all of the child-like slaves well. Margaret Mitchell knew perfectly well that slavery was going to end, and that relieved her of any obligation to point out how terrible slavery really was.

[madrchsod]

3. illinois`s birth rate has dropped to the 1933 level....

more people are on food stamps since the program started....it`s beginning to feel like a really long recession

[pscot]

4. Worse

In the 30's we still had a resource base to draw on.

[dixiegrrrrl]

5. I think we are in a 2009/2010/2011 etc Depression.

If there are 40 million people on food stamps, things are bad.
Do you know how poor you have to be to qualify for food stamps? VERY poor.

A lot more people had land and could grow/ hunt some food in the 30's.
I remember my grandmother talking about "porch rabbit" some people had to cook,
a term she never explained and I had to look it up.

People could use horses or mules to travel to town.
Today if people have no cars they find it hard to find decent stores.

One of the reasons Roosevelt created Soc. Sec. was because so many older people had NO income during the depression, and if they had no family, they were goners.

Let that be a lesson to all of you under 55.

[potassiumnitrate]

6. LOL Not even close

Who's the ignorant moron who wrote this drivel?

[nadinbrzezinski]

7. No, look at the lost decade in Japan

or the far less known 1870s in the US.

Those two are MUCH CLOSER to what we have right now.

[Raspberry]

8. You'll be able to tell when we are

It will be when people no longer have cell phones, Internet, or cable TV and when there are no longer lines in fast food restaurants, and when people actually stop wasting $$$ on stupid stuff.