1. The Great Recession vs. The Great Depression Dr. Norman Cloutier, Director UW-Parkside Center for Economic Education Wisconsin Council for the Social Studies Madison, Wisconsin 3/15/10

2. Peak Unemployment Great Recession October 2009 unemployment= 10.1% Feb 2010= 9.7% Great Depression 1933 unemployment = 25% Non-farm unemployment may have been more than 35%

3. Economic Growth Great Recession 2008 Q2 to 2009 Q2, real GDP growth= -3.83% 2009 Q4 annual rate= +5.9% Great Depression 1929-33 real GDP growth= -30%

4. Inflation Great Recession July 2009 12-month= -1.97% Jan 2010 12-month= +2.65 Great Depression 1929-33 inflation= -24.4%

5. Duration Great Recession Began December 2007 NBER called recession in December 2008 Has it ended? Two consecutive quarters of positive growth: 2009 Q3= 2.2 2009 Q4= 5.9 Great Depression Generally accepted 1929-39 Actually two recessions: 1929-33 and 1937-38

6. Banking Great Recession 2008 to Feb 5, 2010 bank failures= 191 $385.6 billion in deposits … or 2.7% of GDP Great Depression 1930-1933 bank failures= 9,106 $6.9 billion in deposits … or, 7.2% of GDP “What we are witnessing is essentially the breakdown of our modern day banking system.” --Bill Gross, manager of the world’s largest bond mutual fund, PIMCO

7. Why were (are) economists so concerned about this recession? Fear and panic in the commercial paper market. On September 16, 2008 the Reserve Primary Fund money market mutual fund “broke the buck.” Risk aversion and the flight to quality. As businesses contracted, job loss increased at an alarming rate.

8. Job Loss as Percentage of Employment Peak 8.4 million jobs lost Lost >500,000 jobs per month, Oct 2008 thru Apr 2009

9. How long did it take to return to peak employment after the end of the recession was called? 1981: 12 months 1990: 23 months 2001: 39 months

10. Alternative Unemployment Rate: Unemployed, marginally attached, plus part-time for economic reasons Feb 2010 16.8%