In 1932, automobile production shriveled by 90%
By BRADLEY R. SCHILLER, Wall Street Journal
"Consider the job losses that Mr. Obama always cites:
In the last year, the U.S. economy shed 3.4 million jobs - 2.2% of the labor force. From November 1981 to October 1982, 2.4 million jobs were lost - 2.2% of the labor force, the same as now.
Job losses in the Great Depression: 1930, the economy shed 4.8% of the labor force. In 1931, 6.5%. 1932, another 7.1%. Jobs were being lost at double or triple the rate of 2008-09 or 1981-82.
Unemployment rates: The latest survey pegs U.S. unemployment at 7.6%. 1982 peak (10.8%). Peak in 1932 (25.2%). You simply can't equate 7.6% unemployment with the Great Depression.
Real gross domestic product (GDP) rose in 2008, despite a bad fourth quarter. The Congressional Budget Office projects a GDP decline of 2% in 2009. That's comparable to 1982, when GDP contracted by 1.9%. It is nothing like 1930, when GDP fell by 9%, or 1931, when GDP contracted by another 8%, or 1932, when it fell yet another 13%.
Auto production last year declined by roughly 25%. That looks good compared to 1932, when production shriveled by 90%.
The failure of a couple of dozen banks in 2008 just doesn't compare to over 10,000 bank failures in 1933, or even the 3,000-plus bank (Savings & Loan) failures in 1987-88.
Stockholders can take some solace from the fact that the recent stock market debacle doesn't come close to the 90% devaluation of the early 1930s."
Mr. Schiller, an economics professor at the University of Nevada, Reno, is the author of "The Economy Today" (McGraw-Hill, 2007).