Are we in a 1930's-style depression? [View All]

[Better Believe It]

Are we in a depression?
by Money Staff
August 25, 2010

The U.S. is in a 1930s-style depression, say Gluskin Sheff economist David Rosenberg and other bad-news bears of today's economic malaise.

Rosenberg notes that the Great Depression also had its high points, with positive reports and even some healthy stock market gains.

But those signs, like the occasional bright spots of today, masked an ugly truth. Rosenberg calls current conditions "a depression, and not just some garden-variety recession."

"We may well be reliving history here," Rosenberg writes. "If you're keeping score, we have recorded four quarterly advances in real GDP, and the average is only 3%."

Mike Shedlock of SitkaPacific Capital Management, writing today for Seeking Alpha, takes a long look at an article from the Jerome Levy Forecasting Center discussing the concept of a "contained depression," which Levy defines as "a long period of substandard economic performance, chronic financial problems, and generally high unemployment" likely to last about 10 years.

While Shedlock disagrees with parts of the Levy article, he writes: "I like the concept of a 'contained depression.' We are certainly in a depression. However, 40 million people on food stamps as of August 2010 masks that depression. . . . For comparison purposes, there (were) just over 11 million on food stamps in 2005."

Shedlock continues through the Levy article, taking it apart point by point, finding some disagreement but ultimately conceding that its conclusions are basically on track.

Read the full article at:

http://articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches.aspx?post=1796914&_blg=1,1796914

Shedlock's stats on the number of people receiving food stamps is inaccurate. In 2005 the monthly average of people on food stamps was 25,718,000. In May 2010 the number is 40,801,392. That's a 60% increase in just five years! BBI