The Great Depression of the 1930s was an economic downturn that became a prolonged malaise. The economist Robert Shiller asks whether that pattern might be repeated.

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Two-Thirds of Public Restaurants Are Seen at Risk of Bankruptcy

(Bloomberg) — Nearly two-thirds of publicly traded restaurants are at risk of bankruptcy as the Covid-19 pandemic batters the industry, according to a new study.

The concern is higher for small companies and restaurants that specialize in dine-in, consulting firm Aaron Allen & Associates said in an analysis. It identified Bloomin’ Brands Inc., Potbelly Corp. and Chili’s owner Brinker International Inc. among those at greater risk.

“It’s really the full-service model that’s in the biggest danger,” principal Aaron Allen said. “Some of those that are in casual dining — a lot of those had already been bleeding cash, bleeding locations.”

In 1929 many people expected the stock market to bounce right back and that decline was short-lived, in one sense: The market rose almost half the way back to its 1929 peak by April 1930. But it fell sharply again, and the crash set in motion a train of powerful narratives that resemble some of the popular notions that are circulating today.

Much as President Trump dismissed the seriousness of the Covid-19 pandemic in its early days, President Herbert Hoover made optimistic forecasts that proved to be wrong.

Much as people fret these days about extreme polarization between Democrats and Republicans, so too were people of that era concerned about extreme political divisiveness. After losing the 1932 election to Franklin Delano Roosevelt, for example, President Hoover, by then a lame duck, called F.D.R.’s plans a “march to Moscow.”

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Much as people today have experienced long lines and empty shelves at supermarkets, in the Great Depression people fretted about long lines and empty cash registers at banks.

There are other troubling parallels: Fear of long-term unemployment and a never-ending depression was rampant back then, leading people to restrain spending, thus prolonging the downturn. This may not happen now, but it is a danger.

Much as now, in the Great Depression people were very focused on maintaining a “fair wage” in the face of economic distress. But this led to nationwide resistance to nominal wage cuts for anyone, even when retail prices were falling rapidly.

This appears to have had the unintended result of inducing employers, who could not afford to keep everyone working at their former wages, to lay off many people. The economists Harold L. Cole of the University of Pennsylvania and Lee E. Ohanian, of U.C.L.A., have shown that this may explain some of the extreme duration of Great Depression unemployment.

Another development back then may have resonance today. Faced with widespread poverty, even people with money voluntarily embraced austerity, saying they no longer needed to “keep up with the Joneses.” Their reduction in consumption helps to explain the severity and duration of the Depression. If contemporary culture shifts in a similar way, it could limit the economy’s ability to bounce back.

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