References to Great Depression warp perception
On Monday when the Dow jumped 936 points, a worried world finally heard an encouraging reference to the Great Depression.
Turns out that was the biggest spike in the Dow Jones industrial average since 1933. At 11 percent, the jump was the fourth highest in history.
It’s about time that the Depression was invoked for positive effect.
The steady drum beat of comparison to the Depression the previous week as stock averages eroded was threatening to warp perception.
No one can deny the wealth-dissolving impact of the recent massive sell off, but current economic conditions would have to worsen by a factor of three- or four-fold to even approach those of the 1930s.
References to the Depression are handy, attention grabbing and likely to continue.
So it behooves us to have at least few basic facts at hand to put that era into proper perspective.
In the Depression unemployment rose to about 25 percent.
By comparison, in September unemployment was 6.1 percent, still far below the previous post-World War II high of 10.8 percent.
At the height of the Depression about one in 10 homes had been taken over by banks due to foreclosure.
Currently banks own far fewer than one in 100 homes due to foreclosure.
In the Depression about one out of three banks failed. Depositors lost about $21 billion, adjusted for inflation.
In the current meltdown only 15 banks have failed. No depositors have lost money.
In the Great Depression the U.S. economy shrank for four consecutive years.
So far the U.S. economy is still growing. In the last quarter growth was 2.8 percent at an annualized rate. Most analysts are predicting a downturn, but it hasn’t happened yet.
The stomach-churning gyrations in the stock probably are not over yet. There may be darker days ahead. Not all analysts are convinced that the stock market averages have found a bottom.
Nebraskans have their own reasons for economic distress. Prices for grain that were high only mere weeks ago have plummeted. Some farmers may have locked in prices on futures contracts, but the recent rosy predictions of record farm income for the state presumably will be adjusted.
Still, pegging historical references to actual facts should have a steadying effect on emotions.
By the standards of the Depression, average Americans are amazingly well to do.
There’s a bit cheer of in that perspective, just as there is in finding joy in gas prices that have dipped below $3 a gallon. A sense of well-being, as researchers tell us, is relative.
Turns out that was the biggest spike in the Dow Jones industrial average since 1933. At 11 percent, the jump was the fourth highest in history.
It’s about time that the Depression was invoked for positive effect.
The steady drum beat of comparison to the Depression the previous week as stock averages eroded was threatening to warp perception.
No one can deny the wealth-dissolving impact of the recent massive sell off, but current economic conditions would have to worsen by a factor of three- or four-fold to even approach those of the 1930s.
References to the Depression are handy, attention grabbing and likely to continue.
So it behooves us to have at least few basic facts at hand to put that era into proper perspective.
In the Depression unemployment rose to about 25 percent.
By comparison, in September unemployment was 6.1 percent, still far below the previous post-World War II high of 10.8 percent.
At the height of the Depression about one in 10 homes had been taken over by banks due to foreclosure.
Currently banks own far fewer than one in 100 homes due to foreclosure.
In the Depression about one out of three banks failed. Depositors lost about $21 billion, adjusted for inflation.
In the current meltdown only 15 banks have failed. No depositors have lost money.
In the Great Depression the U.S. economy shrank for four consecutive years.
So far the U.S. economy is still growing. In the last quarter growth was 2.8 percent at an annualized rate. Most analysts are predicting a downturn, but it hasn’t happened yet.
The stomach-churning gyrations in the stock probably are not over yet. There may be darker days ahead. Not all analysts are convinced that the stock market averages have found a bottom.
Nebraskans have their own reasons for economic distress. Prices for grain that were high only mere weeks ago have plummeted. Some farmers may have locked in prices on futures contracts, but the recent rosy predictions of record farm income for the state presumably will be adjusted.
Still, pegging historical references to actual facts should have a steadying effect on emotions.
By the standards of the Depression, average Americans are amazingly well to do.
There’s a bit cheer of in that perspective, just as there is in finding joy in gas prices that have dipped below $3 a gallon. A sense of well-being, as researchers tell us, is relative.
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