"Failed banks. Panicked markets. Rising unemployment. For students of history, or people of a certain age, it all has an all-too-familiar ring. Is this another Great Depression? Not yet," John Waggoner wrote for USA Today
Soup lines, Hoovervilles and other Depression-era imagery have become commonplace in the media. Journalists have compared the current downturn to the Great Depression hundreds of times. On the networks (ABC, NBC and CBS) alone, there were 70 comparisons in the first six months of 2008. Since July 1 that number more than doubled to 157. But as Waggoner pointed out - the similarities aren't even close.
"Our economic woes dwindle in comparison. As of the end of June, the latest data available, the nation's gross domestic product was still growing at a respectable 2.8% rate. In the third quarter, it fell at an annual 0.3% rate. Unemployment in September was 6.1%. ‘We're a long way from the D-word,' says David Wyss, chief economist for Standard & Poor's. ‘It's a recession.'"
Another reason the Great Depression, Part II is not in the realm of possibility is because the government learned its lesson from the Depression. Higher taxes, tariffs and interest rates were the Hoover Administration's responses to the Depression and they ended up making things much worse. But according to Waggoner, the government has been proactive with even the smallest chance of a Depression being a possibility.
"In contrast, the government this time has been active in trying to prevent an economic meltdown, precisely because officials worried about another Great Depression. ... The $700 billion bailout bill, and the fiscal stimulus checks that went out early this year, although controversial, show that the government is willing to intervene in the financial system to keep it afloat."
