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Great Depression Unemployment Didn't Hit 25 Percent Overnight

Posted Dec 05, 2008 02:26pm EST by Henry Blodget

A few months ago, when you dared raise the specter of a second Great Depression, most people responded that the current mess is completely different from the Depression because in those days we had 25% unemployment. Here are the problems with that argument.

First, unemployment stats are calculated differently now. If we calculated unemployment the same way we did in the Depression, our unemployment rate would be much higher.

Second, unemployment during the Depression didn't get to 25% overnight. It got there over three years, during which most people never dreamed it would get anywhere near that high. When unemployment started its run to 25% then, it was lower than it was last year.

In 1929, unemployment was below 5%. By the end of 1930, as the New York Times reveals, it had risen to just below 10%. The following year it hit 16%. In 1932, it was 24%. And in 1933, it peaked at 25%. It then took 19 years to get back to the pre-crash low.

As today's depressing jobs report showed, unemployment is now rising rapidly. Not as rapidly as in 1930, but rapidly. With luck (and good policy), this time it will peak below 10%, hopefully well below. But it's too early to be certain.

If you're looking for reasons why the current crisis won't end up being anything like the Great Depression, however, today's 6.7% unemployment rate shouldn't come as much comfort.

See Also:
After Crappy Decade, Stocks Always Do Great? Wrong
Jim Grant: Go Ahead, Fools, Keep Buying Treasuries

248 Comments

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:31PM EST

If the Govt. factored in all of the people getting off unemployment and still not working............ it would be at 15% or HIGHER!!!!!!! DUHHHHHHHHHHH

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:34PM EST

DOW = 7200 when all is said and done

- Friday December 05, 2008 02:35PM EST

Thanks for laying it down..Folks, don't believe propaganda on face value.....these guys just told you that if we calculated unemployment the way in 1929 now, it would be higher.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:36PM EST

The problem is why aren't people mad at the crooks who caused this debacle. Instead we reward them with bailouts that punish the responsible citizens. Crooks include greedy homeowners who signed up for homes dreaming about a perpetual ATM machine at their disposal. But the biggest crooks are the WS scum that engaged in CDS and other unregulated activity without a thought about the consequences. They reaped billions in the process and now want to rob the responsible citizens by needing bailouts. The govt. should understand basic morality otherwise we are bound to repeat the same mistakes again and again.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:37PM EST

The world is changing very fast. Big will not beat samll anymore. It will be the fast beating the slow------Murdoch

- Friday December 05, 2008 02:37PM EST

The company that layed me off told me business conditions were deteriorating rapidly....it is a rather large company, so you know....tomorrow you people will realize. No one has any incentive to really tell you all will be bad......no one wants to deliver this news....but I speak truth.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:38PM EST

OH and by the way it's Friday........... The market MUST go up, so that everyone goes home for the weekend with a happy face! This country and USSA Govt. is a bunch of BULL

__A_YAHOO_USER__
__A_YAHOO_USER__ - Friday December 05, 2008 02:42PM EST

To be honestn we will not end in similar to Great Depression of 1929.....The answer is never.....The action today is very quick with regards to funding,finacial credits and stimulus plus other infra-structure combine all of these will stimulate jobs,wealth,investment advancement and growth......1929 Depression has no such things I mentioned the simple one is computer.........Yes there is a pain,like the total Job lay-out or Jobs cut,but when all the package of all incentives,infrastructure works as well the financial package got into effect and works,Millions Job will be created once the program is in operation....Do not worry all set backs is just temporary.... Happy Christmas.

- Friday December 05, 2008 02:45PM EST

Yes YESS YESS buy more securities from me so I can dump them on you.

The Wiggins
The Wiggins - Friday December 05, 2008 02:47PM EST

Sounds like everyone is wishing for the great depression. too bad they couldn't have been born 80 years ago. they could enjoy standing in the soup lines. the rest are focusing on positive news, and hoping things turn around soon. we want good things to happen in America, not shouting as much as we can how bad it COULD get

Venu
Venu - Friday December 05, 2008 02:48PM EST

Despite all bad news for the last couple of weeks, major indexes are rising. Does it mean investors already calculated what the bottom of the crisis could be? or it's only a foolish bear trading to take some profits?

Noneyabizness
Noneyabizness - Friday December 05, 2008 02:48PM EST

Stock up on canned foods.... and get a gun!

Anthony
Anthony - Friday December 05, 2008 02:49PM EST

This is all the British Crown's fault. Watch Ring of Power.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:50PM EST

Why would people want to work? With a democratic government, you make more $ by being unemployed ;)

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:54PM EST

Dear George B.& Ben B., Thanks for bailing us out you Morons & the american people are Morons too. But I'm still making my $250.000 a year just sitting around here doing nothing. If our company didn't get this Bailout money. I'd be unemployed too. I LOVE THE USSA!!!!!

snowefiend
snowefiend - Friday December 05, 2008 02:54PM EST

Check the new empsit.pdf. U-6 = 12.5% now.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:57PM EST

Why, O Lord, do you stand far off ?

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:59PM EST

The start of a NEW Great Depression is underway. Wait until all of the unemployed just give up and run out of ways to pay bills. (Car loans, student loans, credit cards, business mortgages...What's NEXT!!) In other words: "We ain't seen nothin' yet." I didn't ask for any of this and I want no part of it...I PAYmy bills. If I can't afford something...well...I DON'T BUY IT!! Seems simple to me. I guess I'm the idiot who shouldn't expect any of money back forked over during this calamity making bailout. I figure this mess'll be over in 5-6 years.

Yahoo! Finance User
Yahoo! Finance User - Friday December 05, 2008 02:59PM EST

So when are they going to listen to me .... let the bad companies fail and take this buy out money and give it to us good citizens who have paid our mortgages and taxes on time. Pay off my mortgage - and 4 million other people's - with a cap of $300K - let folks refi the rest for 3% direct with the government ... and see what happens when you free up $1000 or more in a monthly budget for each of us .. in a month or two consumer spending would really pick up. And this all goes back to Peter Drucker and his crap business theories that started this cycle of greed.

s
s - Friday December 05, 2008 02:59PM EST

Hey, Guys! All's I got to say is that this is going to be WORSE than the Great Depression!!!!!!!!!!!!!!!!!!!! We have so many "wild cards" in the mix now - including widespread greed by the Elites (and regular people, too!). Also there are more of us in more concentrated areas, and NOBODY CARES about each other anymore (well, a large percentage, anyway). In addition, this is a truly global event. I think the "powers that be" are feeding us a bunch of BULL (along with a little "crow").!!!!!!!!!!!!!

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