Another Great Depression?

From the Morganton News Herald (The Worst of Times), Mark Strazizich forecasts the probability:

"I don't think we're ever going to see another Depression," Strazicich said.

Here is the full Strazizich section:

Could it happen again?

Whether the country is in a recession depends on what news broadcast you watch, what newspaper you read or economist you listen to.

But Mark Strazicich, Ph.D., an economics professor at Appalachian State University in Boone, said the common definition of a recession is when the Gross Domestic Product falls for two quarters. That means the economy is shrinking, he said.

According to the Bureau of Economic Analysis, Gross Domestic Product is defined as the output of goods and services produced by labor and property in the U.S.

Strazicich said the country's Gross Domestic Product has grown by 3 percent for 200 years.

But the fourth quarter of 2007, the GDP grew by only 0.6 percent, he said.

"That was a sign that things have slowed down," Strazicich said. Even though there hasn't yet been a negative growth in the GDP, Strazicich believes we could see one when a new report is released this month.

Another predictor of a recession is job loss. In January, February and March, the country experienced a net loss of jobs, Strazicich said.

Strazicich said he doesn't want to stick his neck out and say the country is in a recession but, he said, "Those job numbers, I think, are the worst sign."

Even if the country is in or headed toward a recession, Strazicich doesn't believe it will be a bad recession. And, he said, "I think the chances of having a Great Depression are virtually zero."

The reason? The economy is more resilient now because of programs that were implemented after the Great Depression of the 1930s, Strazicich said.

One of the major things to happen after the Stock Market crash in 1929 was a run on banks. People panicked and started pulling their money out the banks, which was one of the reasons banks closed, said Strazicich.

Now, the Federal Deposit Insurance Corporation protects the first $100,000 in a bank account.

In the 1930s there was no unemployment insurance or social security and Medicare, Strazicich said. Those are what economists call automatic stabilizers, he said.

In addition, the worst year of the Depression was 1933, when the unemployment rate in the country reached 25 percent. The national unemployment rate in February was 4.8 percent. The Federal Reserve also knows how to manage things better now, Strazicich said.

"I don't think we're ever going to see another Depression," Strazicich said.

Comments

[Puck]

What is his take on unicorns?

[Curt Doolittle]

Of course, his analysis shows that he has no understanding whatsoever of the factors that caused that depression. (Loved the 'stand on unicorns jibe.)