The new year provides a vantage point to review what was one of the worst year’s in recent U.S. economic history. What has been called the “Great Recession” had already begun in December 2007, but a year passed before the r-word was official. The financial collapse of late 2008 carried over into the first quarter of 2009, when the economy suffered its worst decline in 27 years. As 2009 ended, most economists were confident the deepest and longest recession since the Great Depression was in fact over.
The recovery has been lackluster and owes much to government programs aimed at stimulating demand by enticing consumers to buy homes and cars. Unemployment still tops 10 percent nationally, as more than 15 million people remain out of work. Some economists call it a “jobless recovery,” and the recession is blamed for the loss of about 7 million jobs.
As bad as it has been, how does the Great Recession compare to the Great Depression of the 1930s? To keep the current situation in perspective, consider the following:
Great Depression: in the first three years, 9,096 (50%) of the nation’s banks failed; “Great Recession”: from December 2007 to May 2009, only 57 banks failed (0.6%).
Great Depression: one in four workers were unemployed; “Great Recession”: one in ten.
Great Depression: overall economic decline was –26.5%; “Great Recession”: –3.3%.
Great Depression: at the outset, the stock market fell –89.2%; “Great Recession”: the biggest decline was –53.8%.
Where the Great Recession “outperforms” the Great Depression is in the extent of the federal government’s response. Emergency spending programs during the 1930s were smaller relative to the 2009 American Reinvestment and Recovery Act as a percentage of GDP. And in the period September 2008–May 2009, the Federal Reserve increased the money supply at a rate seven times that in 1933.
Related Links
- Top Business Story: Recovery from Great Recession
Summary of the main events of the yearlong financial crisis that easily topped the economic news for the year 2009. (Source: Associated Press, December 21, 2009) - Interactive Map: The Economy Where You Live
This interactive map allows you to compare economic conditions—such as home foreclosures, unemployment rate, and average household income—in your county with other counties throughout the nation. (Source: National Public Radio; accessed January 7, 2010) - Timeline: A Year of Financial Crisis
An interactive chronology that reviews the main events of the financial crisis from September 2008 to August 2009. (Source: National Public Radio; accessed January 7, 2010) - Great Depression vs. “Great Recession”
A historical comparison of economic data between the Great Depression of the 1930s and the current downturn, which some have called “the Great Recession.” (Source: cnn.com; accessed January 7, 2010)