With the nonstop talk about Greece’s dire financial situation, one wonders just how bad things really are.
The jury is still out on whether or not Greece is technically in a depression.
But, Bloomberg’s Tom Keene says that regardless of your classification, the country is actually worse off today than the United States was in 1933 — at the very bottom of the Great Depression.
“Economic depression is highly subjective and includes the depth of contraction with the chronic nature of a given slowdown,” Keene wrote Monday. “What is certain is the plunge in output qualifies Athens to scream: ‘depression.'”
In the chart below, Keene compared the height of the US economy in 1929 with that of Greece in 2007, both represented by the blue circle on the left.
The trajectory of Greece’s relative real GDP thereafter (and before) is followed by the white line, while the historical US data is represented by the circles.
As you can see, the US economy took a deep dive to the red circle, and improved greatly from there.
But today, eight years after Greece’s peak, real GDP is still tumbling.
And what’s worse, Keene’s comparison was done with US dollars, which he says “makes a huge difference to the Greek domestic economy living on weaker euros and the possibility of an even more fragile drachma.”