The first statistic cited by those who dismiss the possibility that our current mess will end up looking anything like the Great Depression is unemployment. Unemployment was 25% in the Great Depression, the story goes, and it’s only 6% today. So no matter how bad today’s crisis gets, it won’t be like the Great Depression.
What this argument often ignores is that unemployment in the Great Depression didn’t hit 25% overnight.
In 1929, unemployment was below 5%. By the end of 1930, as the chart below from the New York Times shows, it had risen to just below 10%. The following year it hit 16%. In 1932, 24%. And in 1933, it peaked at 25%. It then took 19 years to get back to the pre-Crash low.
Unemployment is now rising rapidly. Not as rapidly as in 1930, but rapidly. With luck (and good policy), this time, it will peak below 10%, hopefully well below.
If you’re looking for reasons why the current crisis won’t end up being as bad as the Depression, however, today’s 6% unemployment rate shouldn’t come as much comfort.