The Worst Recession Since the Great Depression was 1980-82

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    Aug 14, 2012 10:57 PM GMT
    http://www.paulnathan.biz/commentaries/9-the-great-recession.html

    But, we have not had "the worst recession since the Great Depression"! This is not the "Great Recession",1980- 82 was.

    A recession is defined as two consecutive quarters in the gross domestic product (GDP). The US went into a recession in the fourth quarter of 2008 as the GDP fell by 1.1%. In the fourth quarter it fell to 6.6% and in the first quarter of 2009 the GDP was negative 6.5. The figures may be revised and even challenged, but the general direction and depth are pretty clear by now. Since then the GDP turned positive and has been so ever since.

    Now consider the recession of 1980. In the second quarter the GDP fell 8.23%, much greater than the present recession. It was negative through the first quarter of 1981 in which it was negative 6.5%. 1980 was an election year and the prime rate soared to over 20%. President Carter pressured Paul Volker to imposed credit controls and cut interest rates, which he did and brought the rate down to 11%, almost half
    its former level.

    After the election when Ronald Reagan won in a landslide, Volker allowed rates to return to market levels and they hit 21.5% During the 80-81 period GDP went positive briefly due to the fed's artificial stimulation. It is looked back as a double dip recession as we fell back into negative growth in 1982, but in fact it was one recession briefly interrupted by a failed government attempt to prevent it. (I expect somewhat the same results this time.)

    During those years we had a thing called the "misery index". It measured the pain that the average person was experiencing. It was made up of a combination of inflation and unemployment. At the worse of the recession, the inflation rate hit 14%. Today it is running 1%. Unemployment back then at its worse point ran 10.8%. The worse point today has been 10.1%. The misery index at worse back then hit 21%. During our recent recession it was more like 12%. Almost half as painful. Clearly, the facts do not support the perception that this is a worse recession than the 1980-82 recession.
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    Aug 14, 2012 11:01 PM GMT
    And the turnaround was the direct result of policies of the Reagan Administration.
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    Aug 14, 2012 11:18 PM GMT
    Bloomberg begs to differ.

    U.S. Recession Worst Since Great Depression, Revised Data Show

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNivTjr852TI
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    Aug 15, 2012 2:47 AM GMT
    Ex_Mil8 saidBloomberg begs to differ.

    U.S. Recession Worst Since Great Depression, Revised Data Show

    http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aNivTjr852TI


    Except even as the data from Bloomberg shows, the decline for the 1980-82 recession was worse in percentage terms. Bloomberg says there was a decline of 3.9% in GDP over 12 months and yet in the second quarter alone in 1980 the decline was 8.23%! I think it depends on the duration and how "worst" is defined - but either way you cut it both were pretty bad.

    The change when it comes to the rebound is remarkable. The rebound this time around was mismanaged.

    Also counterpoint here - http://www.politifact.com/truth-o-meter/statements/2009/nov/17/sarah-palin/palin-claims-reagan-faced-worse-recession-obama/ - depends on the measure and the importance you place on them - e.g. the misery index was far worse during the Reagan years (inflation + unemployment - as the Obama administration hasn't had to deal with rampant inflation which was also one of the primary causes for the rapid rise in debt during the Reagan Administration). While Politifact claims that Palin's statement that Reagan had a worse recession, even by their own analysis and underlying data it shows several primary metrics where he did have a worse recession to deal with.
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    Aug 15, 2012 2:56 AM GMT
    More context here - "The Economy Is Bad, but 1982 Was Worse":
    http://www.nytimes.com/2009/01/21/business/economy/21leonhardt.html
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    Aug 16, 2012 1:59 AM GMT
    Unlike when Obama took over, there was no recession when Reagan took over, just runaway inflation. Reagan caused the recession of 1981-2 with his (as George H. W. Bush put it) "voodoo economics" after which Reagan told the Federal Reserve to go back to Keynes and introduced a huge stimulus program (including the discredited Star Wars project) and a tax raise in order to fund it. In fact he made 11 major tax increases, something Republicans conveniently seem to forget.
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    Aug 16, 2012 2:12 AM GMT
    wow you guys are slow..
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    Aug 16, 2012 2:34 AM GMT
    I'm sure you must mean slow as in scholarly. icon_wink.gif
  • Webster666

    Posts: 9217

    Aug 16, 2012 2:41 AM GMT
    The more recent economic collapse was not a recession.

    It was (and continues to be) the Geroge W. Bush Great Depression.