The Great Recession vs The Great Depression Dr

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The Great Recession vs. The Great Depression Dr. Norman Cloutier, Director UW-Parkside Center for

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

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,

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

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

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.

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

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

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

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.

Alternative Unemployment Rate: Unemployed, marginally attached, plus part-time for economic reasons Feb 2010 16. 8%