Great Depression – 6 Years GDP Exceeded 8% Growth

[angel eyes]

The Bush Administration and their supporters are ecstatic about last
quarter's GDP increase of 7.2 percent on an annual basis.

However while the GDP is an indicator of the state of the economy, the GDP is not the singular barometer of the economy.

As an example, during the 12 years of the Great Depression, the economy expanded in six different years with a growth rate for the GDP in excess of 8 percent.

[dofus]

1. By what measures did the economy expand

in those years?

I'm listening to the John Kenneth Galbraith book on the crash of 1929 and he says that industrial production dropped during the first four years until in 1933 it was at only 10 or 12 percent of capacity. Starting at that low point, a series of 8 percent increases would still only bring it back to where it was at the outset.

For much of the Great Depression unemployment was officially at 25%, and even as late as 1940 it was at 20%. And a lot of people who might have been in the workforce simply weren't. True story: my husband's parents got married in 1932. They eloped, and didn't tell anyone about it, and went back to their separate lives. She was a school teacher and would have lost her job because married women couldn't hold a teaching job then. He was an intern, and likewise interns weren't allowed to be married. So those two people kept their jobs, but how many married women would have continued teaching? And so on.

[angel eyes]

2. GDP by itself not an indicator that the economy is flourishing

Starting at that low point, a series of 8 percent increases would still only bring it back to where it was at the outset.

True - but the point I am making is that the growth in the GDP (i.e., last quater's GDP growth of 7.2%) is by itself not an indicator that the economy is flourishing.

[Gulf Coast J]

3. I don't think the current numbers resemble anything close to these...

GDP in billions of current dollars GDP in billions of chained 1996 dollars

1929 103.7 822.2
1930 91.3 751.5
1931 76.6 703.6
1932 58.8 611.8
1933 56.4 603.3
1934 66.0 668.3
1935 73.3 728.3
1936 83.7 822.5
1937 91.9 865.8
1938 86.1 835.6
1939 92.0 903.5
1940 101.3 980.7
1941 126.7 1,148.8


http://www.bea.gov/bea/dn/gdplev.xls

[EconomicsDude]

4. In a word....no

The Great Depression did not last 12 years. The Great Depression lasted 43 months, and ended in March of 1933. It was the longest recorded economic downturn in U.S. History (although the contraction in 1882 to 1885 lasted almost as long at 38 months).

<i>True - but the point I am making is that the growth in the GDP (i.e., last quater's GDP growth of 7.2%) is by itself not an indicator that the economy is flourishing.</i>

Right, and NBER--the organization that dates recessions/expansions--does not look at just GDP. They look at other things like investment, industrial production, personal income, and even employment. They don't concern themselves with dating recessions/expansions in a timely fashion, but try to be as accurate as possible.

The last recession has been over for about 2 years now.

1929 103.7 822.2
1930 91.3 751.5
1931 76.6 703.6
1932 58.8 611.8
1933 56.4 603.3
1934 66.0 668.3
1935 73.3 728.3
1936 83.7 822.5
1937 91.9 865.8
1938 86.1 835.6
1939 92.0 903.5
1940 101.3 980.7
1941 126.7 1,148.8

Excellent, somebody went and got the data. Notice that the numbers are decliin from 1929 up to 1933 and start going up again in 1934. They declined again from 1937 to 1938, which was seen as another recession, but a short one at 13 months duration.

[angel eyes]

5. "In a word....yes"

The Great Depression did not last 12 years. The Great Depression lasted 43 months, and ended in March of 1933. It was the longest recorded economic downturn in U.S. History (although the contraction in 1882 to 1885 lasted almost as long at 38 months).


The vast majority of published infomation on the Great Depression states the depression lasted 12 years.

In fact I never read of the length of the Great Depression being anywhere near as less than 4 years.

BTW - Unemployment in 1934 and 1935 was over 20% and in 1936 thru 1939 was in the high teens.

[Gulf Coast J]

7. Nope

As the earlier poster said, the NBER is the group that pretty much decides when recessions begins and end. It really doesn't matter what some half-wit journalist type with no economics background has to say on the matter.


http://www.nber.org/cycles.html/
Recessions during the 'Great Depression'
August 1929(III) - March 1933(I)
May 1937(II) - June 1938(II)

[Code_Name_D]

8. And of course we all know...

that the NBER is perfect and without biase. There is no need for historians and economist to question the party line. Listen only to big-brother.

[angel eyes]

9. "Yes"

http://www.nber.org/cycles.html/
Recessions during the 'Great Depression'
August 1929(III) - March 1933(I)
May 1937(II) - June 1938(II)


Technically recessions occurred during the Great Depression (1929 - 1940).

[Code_Name_D]

10. Dou!

I got taken in by another lie.

[Code_Name_D]

6. Just like the W resesion was "the shortist resesion in US history?"

The fed didn't even admit that it WAS a resesion until they started touting the "recovery" numbers a year ago.

But the first rule of Republican economics, its ALWAYS in recovery.

[oscar111]

11. Starvation,US:NBER?

OK, pls tell newbie the funding source of NBER.. is it a biased animal? Is B really "business"?

Did you all know that hosp records in NYC show 225 starved outright in the early 3o's? Why isnt this well known? Where is the research on this issue , that also covers records in the other states and cities? This is obviously a big bottom line to the great dep., yet even my partial fact was hard to find on the web. Are our scholars asleep at the wheel?

[unblock]

12. some of the confusion is that economists prefer 'contraction'

recession somewhat, and depression particularly, are more political than economic terms.

economists usually refer to the 'great contraction' as being from 1929-1933.

as the original poster pointed out, the economy grew quite well during the subsequent 4 years, albeit not nearly enough to recover from the devastation of the 1929-1933 contraction. but economically, during those 4 years from 1933-1937, the economy was moving quite nicely in the right direction. it's just that it had too much ground to cover for it to feel like what we usually expect a growing economy to feel like.

this, in turn, is because we tend to conflate 'growing' economy with 'peak capacity' economy. at peak capacity, there are jobs aplenty and everyone feels good. this is true even if the economy is not growing, or is growing only slowly.

there is a difference between the growth of an economy and the size of an economy. in 1933-1937, the economy was growing rapidly yet was well short of its previous size.

kinda like today's stock market, hmmm.

[oscar111]

13. Terminology:"crisis"

crisis was the 1800"s term for contraction, recess, depress.

All these milder terms were introduced to paper over the reality of the phenomenon. View it from the alley-resident's eyes and you will see it in its truest form. Crisis. "contraction" is an armchair economist's term , one used by a person with secure income for rent and meals, plus plenty to spare. Seems most economists have a postage stamp sized area of good logic in their brains, and the rest, which handles values such as compassion, is primitive cellular mess.