It's NOT the worst slump since the Depression -- yet
In a story about short-term interest-rate spreads, Bloomberg says:
Central banks are pumping money into the financial system to combat the worst economic slump since the Great Depression.
You read this a lot. But so far it is patently untrue.
The U.S. employment rate for November was 6.7 percent. Is this the worst since the Depression? No. Unemployment reached 7.9 percent in 1949. Unemployment reached 7.4 percent in 1958. Unemployment reached 10.4 percent in 1983. Unemployment reached 7.8 percent in 1992.
Year-over-year U.S. job loss for November was 1.4 percent. Is this the worst since the Depression? No. In 1945 year-over-year job loss was 7.6 percent. In 1949 year-over-year job loss was 3.6 percent. In 1958 year-over-year job loss was 4.2 percent. In 1975 year-over-year job loss was 2.7 percent. In 1982 year-over-year job loss was 2.7 percent. In 2002 year-over-year job loss was 1.6 percent.
Nor is this the worst downturn since the Depression in terms of the decline in GDP.
It may well turn into the worst slump in 70 years. But the proof isn't there yet. It IS the worst financial collapse since the 1930s. But government is applying all kinds of remedies that weren't used or weren't used as quickly in the 1930s. To say that the worst financial collapse will lead to the worst macroeconomic performance is probably a good bet. But we're not there yet. Bloomberg and others are jumping the gun.