How Does the Pandemic Recession Stack Up against the Great Depression?


  • Group Vice President and Deputy Director of Research David Wheelock explained that the Great Depression was likely the largest and longest slump in economic activity in U.S. history, though records for the18th and 19th centuries are sketchy. “Comparing the 2020 recession with the Great Depression is also fraught with measurement difficulties, but some rough comparisons based on various measures of economic activity are possible,” he wrote.
  • The author began by looking at gross domestic product (GDP), a broad measure of economic activity. He noted the severity of the recent economic downturn: Real GDP fell at annual rates of 5% in the first quarter of 2020 and over 30% in the second quarter […] Wheelock observed that the cumulative decline in the first two quarters of the 2020 recession was somewhat larger than the decline during the first two quarters of the Great Depression. He also pointed out that the drop in economic activity during the second quarter of 2020 was larger than any quarterly decline during the Great Depression.
  • In the case of the Great Depression, the economy continued to contract for more than three years, the author added. “By contrast, consensus forecasts predict that the U.S. economy will expand in the second half of 2020 and into 2021 but that output will remain below the 2019 peak for at least several quarters,” he wrote.
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Wheelock also looked at other key indicators: Industrial production, The unemployment rate, The consumer price index, and The S&P 500 stock price index

  • Wheelock noted that the 2020 recession saw sharp declines in economic activity, employment and stock prices that rivaled or exceeded the initial declines of the Great Depression. However, he pointed out that the Depression persisted, with the economy bottoming out nearly four years later. “The 2020 contraction might turn out to be the sharpest, but also the shortest, in modern times and perhaps of all time in the United States,” he wrote. Recent debate has focused on whether the increase in economic activity since May will be maintained or turn out to be an uptick before a second dip, Wheelock observed. “The virus and the public’s response to it will likely make that determination,” he concluded.

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