Drudge links to this cover story from Britain’s Independent with a headline screaming, “USA 2008: The Great Depression,” which is atrocious.
It should be noted that recession technically occurs when there are two consecutive quarters of contraction in the economy, yet there is no evidence that this has been the case thus far. Last week, revised numbers pegged growth in the fourth quarter of 2007 at 0.6 percent — that’s slow, but it still is growth. The first quarter of this year ended yesterday, and perhaps when the initial GDP is released for the quarter it will show that the economy contracted, suggesting we are in fact in a recession. But that is a far cry from a depression. In 1930, the GDP sank 8.6 percent, and in the most severe year of the depression, 1932, it dropped 13 percent.
If you want to look at another factor-unemployment-the Independent looks even more silly. In 1930, the unemployment rate was 8.9 percent, and it reached as high as 24.9 percent in 1933. In February, the U.S. unemployment rate is 4.8 percent, which was once low enough to be considered “full employment” and actually lower than Britain’s.
I’m not even particularly bullish on the U.S. economy right now, and have significant concerns about the decline of the dollar. This headline served its purpose by drawing attention to itself. But this type of alarmism is utterly irresponsible. (And incidentally, the article itself, about a record number of Americans on food stamps, doesn’t mention anything about a depression).