Greg Mankiw's Blog: Keeping Things in Perspective (Source: Donald Maron)
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5 responses to “Not the Great Depression”
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The comments in the original post are interesting. He’s criticized a lot for comparing 4 years of Great Depression data with one year of Recession data.
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Fair enough. However, most major forecasters say that the 2nd quarter is like the end of this recession. Most are predicting some growth in 3rd, certainly by the 4th, quarter. All sorts of economic indicators are on the upswing. It would take a downturn magnitudes worse than what we have just experienced to begin to approach the Great Depression.
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Mike,
The data on our current recession is only 18 months so far. Note that the Great Depression covered 4+ years and didn’t get to a 29% GDP decline right away. Give it 2 or 3 more years here with the current data before we can compare apples to apples. -
Like I say above, its true that we aren’t out of the woods yet. It is also true that it takes nearly a year beyond the end of a recession to identify it has officially ended. But nearly every major indicator is points away from continued decline and emerging markets are already well on the way to recovery. I suspect the recession will end by 3rd quarter, at latest 4th quarter, this year. Dire pessimism just isn’t warranted in my book.
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“Dire pessimism just isn’t warranted in my book.”
You’re absolutely right. And I’m completely with you on this one. And from what I know about the Great Depression, it affected just about everyone. This recession in many ways has seemed a lot more like a tornado. One house is torn to the ground and the one next door is left in perfect condition.
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