Are we headed for another Depression?

[He Who Shall Not Be Named 2]

I know this is supposed to be a harmless poll, but I am really sick of people saying this economic downturn is another Great Depression.

 

Are things bad? Sure. Are things as bad as they have been for 20 years? Yes. But contrary to what politicians and pundits are saying this downturn isn't anywhere near as bad as the Great Depression.

 

Most people don't pay attention to economic growth statistics. Certainly most people don't carefully track whether we have two consecutive quarters of negative GDP growth which is how economists define a recession, much less concern themselves with the nuances of recession vs depression. In fact there is no widely accepted definition of a depression, even though some have been proposed. The Bureau of Economic Statistics does not declare depressions, only recessions.

 

One of these proposed definitions is a sustained recessionary period in which the population is forced to dispose of tangible assets to fund every day living, as was seen in the US and in Germany in the 1930s. This means more than simply taking on more credit card debt (There was no such thing as credit cards in the 1930s.) or moving out of homes you didn't own to begin with. This means selling cars and furniture and clothes in order to eat. (Even though we aren't at that stage yet I still have problems with the lack of rigor in this definition. You can't sell something without a willing buyer. If everyone is selling then who is buying? This definition doesn't address that.)

 

What most people do pay attention to is unemployment rates. What we have been experiencing recently is what most of Europe (especially France and Germany) considers normal. By that unemployment measure things aren't even as bad as they have been since the Great Depression. Unemployment in the 1980-82 downturn was much worse than now, and the "D word" was hardly mentioned.

Edited December 2, 2008 by Lt. Van Roy

[RikerChick 5]

It's just a quiz dude

[Theunicornhunter 2]

I think these quizzes are pretty ridiculous in general -

 

another point about the "Great Depression" it was also a time when there was usually a single breadwinner - in most cases the father - and if that person was unemployed the entire family was unemployed. In two working parent farmilies it would be hard for most families if one person lost a job but it isn't the same as no income at all.

[RikerChick 5]

Oy. Come on, this is a silly quiz in a silly forum (cotton candy factory). It's not meant to be taken seriously or debated. There are other places on STF to discuss serious topics in a serious way. Also, the quiz didn't say "OMG we're in another depression, run for your lives!", it's could you survive if there was another one.

 

Have some cotton candy and chill

[He Who Shall Not Be Named 2]

I think these quizzes are pretty ridiculous in general -

 

another point about the "Great Depression" it was also a time when there was usually a single breadwinner - in most cases the father - and if that person was unemployed the entire family was unemployed. In two working parent farmilies it would be hard for most families if one person lost a job but it isn't the same as no income at all.

You might have identified a reason for the "smoothing out" of the business cycle over time. At least it is as good an explanation as any. A century ago recessions / depressions were much deeper and much longer than anything most people alive today have experienced. The same was true for economic booms. Wild fluctuations were the norm - to the extent that wild fluctuations can ever produce a norm.

 

In any period of massive economic change - booms as well as busts - there will be some industries that expand and some that contract. With a two-... he, he, expanding busts... anyway, with a two-income household one may be employed in a growing industry and another in a shrinking industry. This might serve to smooth out the two labor market extremes and if it happens often enough the business cycle.

 

We will never eliminate the business cycle altogether however. You know why? Weather. Agriculture. Changing weather patterns can lead to feasts or famines, thus changing the price of food, thus changing the cost of living, thus changing inflation, thus changing economic output, thus changing the labor market, etc.

 

Mmm, chilled cotton candy. :)

[Theunicornhunter 2]

We were discussing this tonight at dinner and most people seem to be spending money like there were no problems; but one person pointed out - most people that are losing money are losing it in 401k's or other investments and I guess time will tell how much that will affect us.

 

The thing is about a "great depression" if we have another one - the people that will survive will be the ones that have food to eat. Most of us could live a couple of years without new clothes or shoes (I said live not enjoy) and we could live without all of our toys but we have to have food and shelter.

[Ian Wood 1]

I agree Van Roy, things aren't that bad today, we'll see what the new presidential term can do for us.

[trekz 7]

I was watching some show that was discussing food and it was pointed out that most grocery stores only have enough food to last three days - hence the steady stream of trucks constantly coming and going with produce, milk, etc. and the constant reshelving. That does make one pause.

 

When we lived out on the farm, we had a pantry that was kept well stocked. We had foods that had been either frozen or preserved in bottles and rice, beans etc. This was used throughout the year, but especially if we were snowed in for a bit .While we have less space now, we may consider having more foods on hand, just in case...

 

I agree that the biggest hits have been in 401's, 457's etc., plus the stock market. As long as one can keep those investments for a time I think they will rebound to some extent over time. Anyway, that's my hope...

 

This could bring leaders and nations to realize how interconnected we are and to work to bring peace and prosperity to all. I'm not holding my breathe on that one...

[Theunicornhunter 2]

I was watching some show that was discussing food and it was pointed out that most grocery stores only have enough food to last three days - hence the steady stream of trucks constantly coming and going with produce, milk, etc. and the constant reshelving. That does make one pause.

 

When we lived out on the farm, we had a pantry that was kept well stocked. We had foods that had been either frozen or preserved in bottles and rice, beans etc. This was used throughout the year, but especially if we were snowed in for a bit .While we have less space now, we may consider having more foods on hand, just in case...

 

I think it was in 1973 that Johnny Carson started a toilet paper shortage by a joke in his monologue - it took several weeks before the shelves were stocked again - so really everyone should keep a few weeks worth of al necessities on hand - most importantly those dry beans and grains (and know how to cook them). I think people have more actual space - it's just filled with more toys.

[He Who Shall Not Be Named 2]

I think it was in 1973 that Johnny Carson started a toilet paper shortage by a joke in his monologue

Were his monologues that bad?

[trekz 7]

The Great Toilet Paper Shortage!

It actually all started as a joke. Johnny Carson was doing his typical NBC Tonight Show monologue on December 19, 1973.

 

Heeeere's Johnnnnnny....

 

Of course, Johnny, like most talk show hosts, had a staff that helped write his monologue. His writers had heard earlier in the day about a Wisconsin congressman named Harold Froehlich. Froelich claimed that the federal government was falling behind in getting bids to supply toilet paper and that "The United States may face a serious shortage of toilet tissue within a few months".

 

His writers decided to include a joke based on this quote in Carson's monologue. He said "You know what's disappearing from the supermarket shelves? Toilet paper. There's an acute shortage of toilet paper in the United States."

 

Too bad they couldn't see the consequence of this statement. You may not be aware if you are young, but the early 1970's was a time of shortages - oil in particular. The next morning, many of the 20 million television viewers ran to the supermarket and bought all the toilet paper they could find. By noon, most of the stores were out of stock! Stores tried to ration the stuff, but they couldn't keep up with demand.

 

Johnny Carson went on the air several nights later and explained that there was no shortage and apologized for scaring the public. Unfortunately, people saw all the empty shelves in the stores, so the stampede continued.

 

Scott Paper showed video of their plants in full production to the public and asked them to stay calm - there was no shortage. The video was of little help. The panic fed itself and continued.

 

They finally got the shelves restocked three weeks later and the shortage was over. It is the only time in American history that the consumer actually created a major shortage (I don't think that the "shortage" of Barbie or Power Ranger dolls at Christmas time could be classified as a real shortage!).

 

And to think that it all started as a joke.

[He Who Shall Not Be Named 2]

Things might be getting worse after all.

 

November saw more first-time unemployment benefits claims than any other month for 34 years. This is at a time when employment should be *up* because of holiday buying.