The Great Recession

According to the New York Times, as of October the unemployment rate has moved to 10.2% “reaching double digits for the first time in 26 years” and “it suddenly seem[s] possible that the nation might yet confront the worst joblessness since the Great Depression” (Goodman). This seems like an overstatement. After all, in the Great Depression GNP had fallen by one third, prices had fallen by 40% and 25% of the labor force was unemployed (Foner 751). The housing industry was also in shambles as was the banking industry, especially those who financed homes (Foner 766). And not only that, America has been in economic crises between the Great Depression and now. In 1975, unemployment was at 8.5% and the misery index (the sum of the unemployment and inflation rates) was at a grand total of 17.6%. And in 1982, unemployment reached a peak of 10.8%, higher than it is now. So Peter S. Goodman’s statement would seem to be an overreaction. Unfortunately it is not. While we have yet to reach an unemployment rate as high as 25% signs similar to those of the Great Depression hint at trouble ahead.
Some of these signs include the current housing market which led the federal government to give a tax credit of $8,000 to first time home buyers hoping to spur the market. Let’s not forget the recent government bailouts of many banks and corporations including AIG ($180 billion), Citigroup ($280 billion), Bank of America ($142.2 billion), and Fannie Mae and Freddie Mac ($400 billion). With all of this money being spent to bail out big business and to spur the housing market, it feels a lot like some of the tactics used in the Great Depression. Hoover wanted to create jobs but was against direct aid which helped lead the country further into the Great Depression. While the $8,000 tax credit seems direct, it is not true aid. Rather it is an incentive for people to spend more therefore helping the housing market rather than citizens. Perhaps this is the right step this time around, but it is hard to ignore the similarities between 2009 and 1929. This is not to say that we are undoubtedly heading toward disaster, but it is hard to believe government officials when they say things are getting better, especially when the similarities are so clear and people are still out of jobs (Goodman).
http://www.nytimes.com/2009/11/07/business/economy/07jobs.html?scp=1&sq=U.S.%20Unemployment%20Rate%20Hits%2010.2%,%20Highest%20in%2026%20Years&st=cse
http://www.realestateabc.com/outlook.htm
http://www.propublica.org/special/government-bailouts