Not the Great Depression
May 29th, 2009 at 9:04 am by David Farrar
This graph was e-mailed to me, originally shown on Andrew Sullivan’s blog. It does put things into perspective. It is presumably about the US economy.
Related posts:
- Cullen talks depression not recession
- BNZ warns of recessions
- Great blog talent
- The recession is now official
May 29th, 2009 at 9:24 am
David the bar for the great depression covers the years 1929-33 whereas all the other bars are a two year periods, at most, and the current “downturn” 2008-09 on your graph presumably covers the period from August 2008 until now – maybe 9 months possibly less.
This graph maybe good for making sort of political point but in terms of being a robust and meaningful numerical analysis – bogus as hell and the comparisons are essentially meaningless.
Vote:May 29th, 2009 at 9:43 am
The recession has not bottomed out yet. Real unemployment in Australia is double what the official figure is.
Vote:May 29th, 2009 at 9:49 am
Does anyone still read Sullivans blog?
Vote:May 29th, 2009 at 10:02 am
Also, to add to Andrei points, growth in the past was a lot less stable
Vote:It would go up and down a lot more than these days
If you took that graph at face value you would think the 50′s were terrible economically but it is well known it was a time of unprecedented prosperity up until that point
May 29th, 2009 at 10:56 am
Good points from andrei and emmess. The current downturn isn’t over yet. The other bars on the graph presumably depict the total extent of the GDP decline from peak to trough. We can’t do that for our 2008-9 downturn yet.
Nevertheless, I am sure that the current downturn is NOT going to be anything like 1929-33. Economic conditions now, and the way governments have reacted to the situation are starkly different.
Vote:May 29th, 2009 at 11:20 am
You ain’t seen nuthin’ yet!
Vote:While the US may be enjoying the dead-cat bounce in their markets at the moment, it won’t last.
Stagflation is inevitable.
May 29th, 2009 at 11:21 am
Yes, Andrei is right. Also, Obama has only been printing currency for a few months so there is hope for the current depression yet.
Vote:May 29th, 2009 at 11:27 am
Previous recessions have seen governments try and talk the economy up. This one differs in that it coincided with a US election campaign where one candidate did his best to talk the economy down. He won. But in destroying business and consumer confidence, he is reaping what he has sewn.
Vote:May 29th, 2009 at 12:09 pm
Thats a new one, Obama single-handedly created the recession!
Is there no limit to his demonic powers David?
Vote:May 29th, 2009 at 12:24 pm
Never heard of “Acorn” Sonic?
Not only did he have a big hand in creating it the bastard is making it worse with every breath he takes.
History will talk about the “Obama” effect, it will signify a dramatic fall from grace within a relatively short space of time.
Thankfully B Hussein Messiah Obama is only going to be a one term president.
Vote:May 29th, 2009 at 12:26 pm
And there was the rest of the world thinking that it was irresponsible practices by US banks and investment funds, along with massive and systematic fraud.
Amazingly it tuns out it was a small community organisation that did it all!
The things you learn on Kiwiblog!
Vote:May 29th, 2009 at 12:38 pm
The greed of the mega-corporations caused this mess, and you blame Obama for it? For real?
Vote:May 29th, 2009 at 12:57 pm
Obama is not helping the situation his messianic attempts will make things worse.
Vote:May 29th, 2009 at 1:05 pm
The greed of the mega-corporations caused this mess?? For real???
Vote:May 29th, 2009 at 1:40 pm
Am looking at one of the kids “wheres wally” puzzles and imeadiately though of young TREVOR MALLARD.
Where are you trev,out at motels doing the PR thing to the media.
At least you were always good at finding motels in the past.
God only knows what gems trev will bring to attention as he rebuilds labours credibility singlehandedly.
Unfortunately he forget as long as he is in the party they have no show.
Good hunting Trev.
Vote:May 29th, 2009 at 1:44 pm
Tghe Government is a zero sum game in that if it cuts entitlements hard then consumption in the economy at large will contract which will in turn affect the Government’s revenue position. It may become some-what self defeating.
Vote:May 29th, 2009 at 1:52 pm
“David the bar for the great depression covers the years 1929-33 whereas all the other bars are a two year periods, at most, and the current “downturn” 2008-09 on your graph presumably covers the period from August 2008 until now – maybe 9 months possibly less.
This graph maybe good for making sort of political point but in terms of being a robust and meaningful numerical analysis – bogus as hell and the comparisons are essentially meaningless.”
The other time periods covered would probably be peak to trough. Sure the 2008-09 bar hasnt finished yet, but it does give you an idea of the scale of the downturn that would be required. It is unlikley considering the global downturn is predicted to be way less than the 10 percent required.
The graph is fine for the point it is making. There is no political point being made. The fact you think there is says more about your reading of the thing than anything else.
Vote:May 29th, 2009 at 2:40 pm
What point might that be Kimble? And to what purpose, if not political?
My point was the graph is, to all intents and purposes meaningless.
Firstly the time periods for each bar are different.
Secondly the start and end points for each bar are somewhat arbitrary.
Thirdly the arbitrary endpoint for the latest bar, which considers the shortest interval, is the present.
The future remains indeterminate, it will bring what it will bring.
Vote:May 29th, 2009 at 3:23 pm
Firstly, the time periods dont matter if it was peak to trough. This should be obvious to anyone given that the title is the 5 Biggest Downturns since the great depression.
Secondly, the time periods dont matter if it is a measurement of peak to trough.
Thirdly, the end point of the latest chart is going to be the present.
The point of the chart is that the current situation would have to get much MUCH worse for declarations that this is just like the great depression to be in anyway accurate. This is so obvious. DPF even says “It does put things into perspective.”
With all the hysteria being spouted about financial end of days, a comparison of previous declines is useful.
“The future remains indeterminate, it will bring what it will bring.”
Yeah, thats a fairly moronic thing to say. But you probably think you are being profound.
Vote:May 29th, 2009 at 3:40 pm
sonic>Thats a new one, Obama single-handedly created the recession! Is there no limit to his demonic powers David?
That isn’t what I said. The US economy was going in to recession, as it does from time to time as a normal part of the business cycle. I’ve seen graphs showing growth and employment trends tracking previous recessions almost exactly, up until Obama started to spread fear, uncertainty, and doubt. And McCain was pilloried by the media for pointing out that although any recession is a bad thing, this one wasn’t much different from the last and the economy would recover in a year or so.
If you tell people that they are in the worst economic downturn since the depression, then they’ll react quite predictably. By saving rather than spending. By refusing to invest. By lobbying for protectionist measures like dairy subsidies. And, in this case, by allowing the government to borrow trillions of dollars to throw at every low-quality project that employs a lobbyist.
Vote:May 29th, 2009 at 3:57 pm
The problem is that they spent up too much and it all came crashing back down to earth!
Vote:May 29th, 2009 at 4:44 pm
David, Lehman Brothers crashing did not come about due to campaign rhetoric. get real.
Vote:May 29th, 2009 at 5:14 pm
Gee Kimble – ya reckon there some device that measures the instantaneous GDP so we can plot it on a graph minute by minute, hour by hour day by day?
Peaks and troughs can only be identified with hindsight – not as events are unfolding. Furthermore the GDP “trough ” of the great depression would have greater than a GDP peak from 100 years prior to that – which is why the time interval is important in estimating any short term trend.
Anyway six months after the wall street crash of 1929 the stock market had recovered to where it had been 12 months previously and it might well have looked like the worst of the recession was over to contemporary observers – and they would have been wrong!
Which is not to say that this downturn will be as bad as that one was but then again it might turn out that way, or even worse.
And no amount of meaningless graphs will change that.
Vote:May 29th, 2009 at 5:44 pm
sonic>David, Lehman Brothers crashing did not come about due to campaign rhetoric. get real.
Some companies always fail in a recession. A recession is nature’s way of clearing away mismanaged businesses. Lord knows it got rid of a lot of dubious ones when the web bubble broke in the late 90s. But the loss of a few banks, a few technology companies, or a few motor companies isn’t reason to overreact and borrow trillions of dollars. Or to run around spinning the situation as being the worst economic crisis in 80 years. But if you do, then you should be prepared for everyone else to join in the panic.
Vote:May 29th, 2009 at 5:44 pm
While the criticisms of the accuracy of the graph are valid, I think Kimble makes an important point:
Undoubtedly there are a number of underlying problems – including both corporate greed and Presidential ineptitude – which make this a very real, and very serious, situation.
But there’s also the danger of the “Chicken Little” effect bringing not just bits of the sky but the whole damn hemisphere crashing down on us if people – and particularly the media, who’ve become used to sensationalising everything to the nth degree – keep talking it up (or down, depending on your choice of semantics).
This isn’t The Great Depression, nor does it look as though it will approach that level of disaster, unless we keep trying to convince ourselves it will. Self-fulfilling prophecy, anyone?
And another important difference – the bastards (mostly) responsible aren’t chucking themselves out of office block windows. Unfortunately
Vote:May 29th, 2009 at 6:48 pm
“Peaks and troughs can only be identified with hindsight – not as events are unfolding.”
So what?
The graphs point still remains. It isnt as bad as the great depression and the economic data would have to be very VERY bad for it to even come close.
Vote:May 29th, 2009 at 9:56 pm
Andrei, although I do think you are almost entirely missing the point, your original criticism has a little merit in that the 2008-9 bar is incomplete, we don’t know where the bottom will be. You miss the point because the periods as shown at the top are almost irrelevant to the graph, they are labels. They point out the duration, but as Kimble is trying to explain, the actual measure is the percentage dip in GDP. The 1929-33 depression did last longer than the others,it was also far deeper. It is probably true than any event where GDP drops as far as it did in 29-33 would have to last longer because it takes time to recover.
I am a little surprised at the graph, in the USA I understood that in many measures, the depression didn’t really seem to end until 1938-39 when the demand for exports to feed the war started to have a significant impact.
This recession could go much deeper yet, the way protectionist measures are being enabled by the EU and USA are exactly how 29-33 spiralled deeper and deeper into a depression, left wing demagogues are exactly what we don’t need right now.
Vote:May 29th, 2009 at 10:31 pm
Am I missing the point? Really?
Six months into the great depression “wasn’t as bad as the Great Depression” because it wasn’t the great depression yet – GDP hadn’t declined by the purported 29.3% the graph shows yet!!! It was still to come – that level of decline was still in the future in mid 1930.
In actual fact after the 1929 crash there was a recovery in early 1930 followed by a deeper crisis starting around August of that year.
But take your comfort from Andrew Sullivan’s pretty picture – the chances are our current recession will not match that of the great depression but there is absolutely no guarantee of that
Vote:May 30th, 2009 at 9:40 am
Kia Ora, David, please say hi to Dr Brash when you see him, and don’t forget to iron out the confusion with the hollow emails if you get the chance, its all getting a little murky and I can’t nail down my iPredict tipping point until I know.
I’ve got 5000 on Bomber @ Tumeke and 12 on you. And has anyone seen a good picture of a penguin on a melting icecube out at sea I could use?
[DPF: Off topic - use general debate - 10 demerits]
Vote: