But it's not a depression (Installment #1384)

[cthulu2016]

At some point we need to coin the phrase "Great Depression exceptionalism." Any comparison to the 1930s is treated as "obviously" outrageous hyperbole, as if the 1930s has a monopoly on hard times.

But it's hard to look at a chart like this (British GDP comparison) and say that the great depression was unique. This is a very deep, very prolonged event with no clear end in sight. I think what confuses the comparisson is the difference between an economic event and its human effects. We have better safety nets today. Bank deposits are insured. There is more access to consumer credit. (At huge rates, but better than starving.)

Many factors explain why we don't have 25% unemployment and Hoovervilles coast-to-coast but that does not mean that the scale of the economic event is so much less in economic terms. The great depression is still "the big one," but on the other hand we know the great depression ended. We don't know that for sure about this downturn.



http://notthetreasuryview.blogspot.com/2012/01/recessions-and-recoveries-historical.html

Bigger version of chart:
http://4.bp.blogspot.com/-nJj1otZvRwE/TyBLsy3zJiI/AAAAAAAAAAo/Dg7mVdMpdH0/s1600/gdp+chart+jan+2012.jpg

[surfdog]

1. The only way to claim we are in a recession

Is to redefine the word

Our current economy in no way fits the definition of a recession

This is not a matter of an opinion , the word has a definition

[cthulu2016]

2. There is no agreed statistical defintion of a depression.

This post is in response to what you wrote at first, not the edit. I am leaving this because you are not the only person who has commented at various times about the a definition of "depression" and this post is offered as being of genral interest.

There is no agreed statistical defintion of a depression.

And all economists agree that a depression can contain periods that are not technical recessions. The Great Depression, for instance, contained many cyclical ups and downs and was often not a recession. A depression is a long period when the ups and downs are both depressed.

I am sure one can find a definition that some one proposed, or that some one uses, or that some one prefers.

What you cannot find is the accepted economic definition of depression expressed in statistical terms because there is no such accepted definition.

[surfdog]

6. Please just stop already

There is a clear definition for the word recession

Our economy is nowhere near a recession which means we are miles upon miles away from a depression it's simple logic

Are you now telling me that a recession is worse than the depression ?

Are you telling me that a recession can contain months upon months of positive GDP and job growth

A recession cannot contain positive GDP growth. Stop rewriting the definition just stop already

[cthulu2016]

8. You are mixing two concepts

A recession is a statistically defined event, usually associated with the business cycle.

A depression is a non-cyclical and long term thing.

I am, indeed, telling you that a depression contains periods that are not recession. This is just what the words mean. I cannot sensibly use them to mean anything other than what they mean.

A recession cannot, by definition, contain months upon months of positive GDP and job growth.

A depression can and usually does.

Here's a simple way to express it... say unemployment was 50%. Real appocalyptic stuff. Then the unemployment rate drops to 49%. That might well signal the end of a distinct period of recession but the economy is still in a depression because if 49% unemployment isn't a depression, what is?

[surfdog]

9. Is a recession worse than a depression

It's a simple question

[cthulu2016]

10. It is an apples and oranges question

Depression is "worse" in that all depressions contain recessions and few recessions lead to depressions but that does not mean that an economy cannot grow within a depression.

There is no continuum of recession and depression. They are not two points along a scale.

Recession is like an injury.

Two patients have life threatening arterial bleeding. One patient you stop the bleeding and they're back to normal in a few days. Another patient, you stop the bleeding but they lost too much blood and go into a coma... or they are anemic and cannot replace the lost blood naturally, or they have another underlying condition, or an infection.

In both cases the bleeding is stopped. (GDP stops going down.) But the patient who cannot bounce back is like a depression.

[surfdog]

11. Now my dog is laughing at you

If all depressions contain a recession and a recession cannot have positive GDP growth then how can a depression contained months upon months of positive GDP growth ?

[cthulu2016]

12. I am glad I made your dog happy.

By your definition (which some people use) the depression that started in August 1929 lasted until March 1933.

By the more usual definition (which most people use, including most economists use) the depression that started in August 1929 lasted until 1941.

You are free to use your definition. No law against it. But by your definition there was never a depression at any point in FDR's presidency. (FDR was innagurated in March 1933. They changed innaguration to January later.)

If you are comfortable with the statement "The depression ended before FDR became president" then by all means, use your definition.

It's a free country. Use whatever definition you wish. But the great majority of people, including most economists, will continue to describe the decade of the 1930s as a depression.

[surfdog]

14. The facts still remain

A recession cannot contain month upon month of positive GDP growth ...this is a fact

You cannot hold an opinion on this matter , this is a fact of reality , this word has a definition

[dawg]

15. You are wrong.

And you and I have already gone around and around about this.

I have shown you the figures that show "month after month of positive GDP growth" in the middle of the Great Depression. You just pretend like that never happened.

Either you have some sort of mental block that does not allow you to realize that "depression" is not exactly the same thing as "recession" only more severe. Or else you have some sort of agenda that requires you to argue with anyone who might suggest that we might be experiencing a mild depression.

On another thread you called Paul Krugman an "idiot" and a "hack" just for using the term in connection with this long-term anemic economy that the Bush administration bequeathed to us.

I don't want to restart the argument, because I'm convinced that you are not actually listening and that you will stick to your own personal definition of "depression" no matter what.

But I do wonder what you are trying to accomplish by doing so?

[surfdog]

17. Here's what I want you to do

Google the words "recession of 37"

That's right there was a recession of 37 ... think about it for a second (one Mississippi)...how could you slip into a recession if you're in a depression ?

1933 was followed by four years of very rapid growth the country was no longer in the depression

[dawg]

18. "Depression" does not simply mean "big recession".

That is what you just don't seem to understand. They are two different concepts and not just two different sizes of the same thing.

In your world, the Great Depression was over in 1933.

Really?

You are the only person who lives in that world.

And normally, I wouldn't make such a big deal about it. But when you're going around calling Paul Krugman an idiot based on something that you fudamentally do not understand, you make all of us look bad.

[surfdog]

20. Think about what you're saying for a second

Is the country in a recession right now ? ...the answer is no we both have to agree on that

We have to agree on that because the word recession has a definition and the current economy doesn't even come close to fitting it

But you claim every depression contains a recession , how can you not see the problem with that statement ?

[dawg]

21. Let me try to explain that to you using the Great Depression as an example.

The Great Depression began with a very severe recession. We all agree on that. When that recession ended (around 1933) the country was in much worse shape than it was before the depression started. Although technically out of recession, the damage was not repaired. Things were getting better, but they weren't back to normal yet.

The Depression was not over, although the country was no longer in recession. Then, around 1937, FDR's premature move to austerity caused the economy to go back into recession. The Great Depression contained both of those recessions as well as the incomplete recovery that took place in the middle.

Just like cancer can go into remission, there can be periods of recovery within a depression. The depression isn't really over until the economy gets back to something approximating it's full potential. Most people think that was around 1941.

Depressions usually contain at least one recession. But they can also contain expansion years, as well. A patient is "sick" until they are well. Even a patient that is recovering is still "sick".

Our economy is still "sick" even though it is recovering. The recovery may hold, or it may turn back down into another recession. If that were to happen, it would be a slam dunk argument to most economists that both recessions were part of a larger, connected event, in other words a depression. I think that a good case can be made that it would still qualify as a depression even if there is no second down-turn.

Please please please please just do this one thing for me, though. I won't ask you to agree with me. But please realize that this issue is far more nuanced than you originally thought and stop calling some of the most prominent economic thinkers on our side "idiots" and "hacks" just because you disagree with their definition of a depression.

[cthulu2016]

16. If you are referring to the phrase "great recession"

If you are referring to the phrase "great recession" I don't like that phrase because it is, as you say, inaccurate.

When people use that phrase they are being wry -- it's not usually meant seriously as a formal description but I still don't like it.

In light of your comments I will change the one use of that now-common blog phrase "great recession" in the OP. It's a phrase people toss around that should be retired.

[xchrom]

3. interesting. nt

[Blue Meany]

4. Take away what's left of the safety net and no one

will doubt that it is a depression. What do you think the unemployment rate would be if we took away social security? Already lots of retirement age folks cannot afford to retire, but that number would be much higher without SS. Those on disability and welfare would then also be part of the population seeking unemployment. What's more, without the money from the programs circulating in the economy, the number currently employed would be much worse.

[ProSense]

5. Given

the only comparable period is 1930 to 1934 and looking at the trajectory, what am I missing?

There is a recovery. All the signs are there.

Paul Krugman: Is Our Economy Healing?
http://www.democraticunderground.com/1002205379

Auto-industry rescue paying dividends
http://www.democraticunderground.com/1002186993

EPI: A solid step in the right direction for the labor market
http://www.democraticunderground.com/1002137284

Some Bullish Housing Forecasts for 2012
http://www.calculatedriskblog.com/2012/01/some-bullish-housing-forecasts-for-2012.html

The Rapid Economic Recovery Republicans Are Praying Against
http://www.democraticunderground.com/1002141773

[Odin2005]

7. Remember that during the Depression the economy was growing after 1933.

But it was growing from a highly depressed level , much like today.

FDR never accepted Keynesianism, so the economy did not fully recover until WW2 forced the injection of gargantuan amounts of money into the economy. We now have the same problem, out politicians are too worried about deficits.

[cthulu2016]

13. What is alarming is that recovery during the great depression was more robust

than what we see today (globally)

A century from now this downturn will be seen as the more significant event, marking a more fundemental and lasting change in the individual's relation to the economy.

[Joe Shlabotnik]

19. It hard to compare the 1930's to now.

This is an entirely different environment. Any recovery is not going to resemble the post war economy. What concerns me is the definition or expectations of what 'recovered' will be to the average person. GDP is an awful measure of the pain or prosperity of the average Joe.