Thursday, December 4, 2008
Unemployment in the Depression
Frequently, you will hear folks like Ben Bernanke and Barack Obama say that "2008 is different than the depression because now unemployment is mid-single digits and back in the depression unemployment was 25%."
Well that's a true statement---It fails to note that back during the market crash of 1929, the unemployment rate was single digits. However, that quickly rose for the next 4 years to a high of ~25%, and stayed high for over a decade.
Well I hope that we won't ever again see unemployment north of 20%, I do think that we will see the negative feedback loop continuing as institutions and individuals de-lever and cut back on investment & spending. This will result in fewer jobs and perhaps a multi-year bout of double-digit unemployment.