The Great Recession vs The Great Depression Dr
- Slides: 10
The Great Recession vs. The Great Depression Dr. Norman Cloutier, Director UW-Parkside Center for Economic Education Wisconsin Council for the Social Studies Madison, Wisconsin 3/15/10
Peak Unemployment Great Recession Great Depression • October 2009 unemployment= 10. 1% • Feb 2010= 9. 7% • 1933 unemployment = 25% • Non-farm unemployment may have been more than 35%
Economic Growth Great Recession Great Depression • 2008 Q 2 to 2009 Q 2, • 1929 -33 real GDP growth= -30% 3. 83% • 2009 Q 4 annual rate= +5. 9%
Inflation Great Recession • July 2009 12 -month= -1. 97% • Jan 2010 12 -month= +2. 65 Great Depression • 1929 -33 inflation= 24. 4% -
Duration Great Recession Great Depression • Began December 2007 • NBER called recession in December 2008 • Has it ended? • Two consecutive quarters of positive growth: 2009 Q 3= 2. 2 2009 Q 4= 5. 9 • Generally accepted 1929 -39 • Actually two recessions: 1929 -33 and 1937 -38
Banking Great Recession • 2008 to Feb 5, 2010 bank failures= 191 • $385. 6 billion in deposits • … or 2. 7% of GDP Great Depression • 1930 -1933 bank failures= 9, 106 • $6. 9 billion in deposits • … or, 7. 2% of GDP “What we are witnessing is essentially the breakdown of our modern day banking system. ” --Bill Gross, manager of the world’s largest bond mutual fund, PIMCO
Why were (are) economists so concerned about this recession? • Fear and panic in the commercial paper market. • On September 16, 2008 the Reserve Primary Fund money market mutual fund “broke the buck. ” • Risk aversion and the flight to quality. • As businesses contracted, job loss increased at an alarming rate.
Job Loss as Percentage of Employment Peak Lost >500, 000 jobs per month, Oct 2008 thru Apr 2009 8. 4 million jobs lost
How long did it take to return to peak employment after the end of the recession was called? 1981: 12 months 1990: 23 months 2001: 39 months
Alternative Unemployment Rate: Unemployed, marginally attached, plus part-time for economic reasons Feb 2010 16. 8%