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home > by publication type > op-eds > Bush, Democrats Sell Fear Itself on U.S. Economy
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| Author: | Amity Shlaes, Senior Fellow for Economic History |
|---|
April 16, 2008
Bloomberg
“Depressing” is the adjective we’re hearing a lot when it comes to the U.S. economy.
There are reports of how the University of Michigan’s consumer-sentiment poll is lower than at any time in the past quarter century. Senator Barack Obama speaks of how, in some places, “the jobs have been gone 25 years and nothing’s replaced them.” A recent Pew survey suggests that fewer Americans see their lives improving than at any point in almost half a century.
The gloom is so thick that it feels positively German. And that’s just our domestic press. The Brits have long since decided that doom is around the American corner. Covering Stearns Cos., a reporter from the Independent wrote, “Wall Street traders said they had never experienced such fear.”
The suggestion behind such talk is that the current situation isn’t merely depressing. It is that the slowdown is like the Great Depression of the 1930s. You almost expect Senators Obama and Hillary Clinton to repeat the lines from President Franklin Roosevelt’s inaugural address of 75 years ago: “The only thing we have to fear is fear itself.”
The analogy is absurd. This economy is to the Great Depression what an April drizzle is to Hurricane Katrina. So far, the Dow has declined about 12 percent from its record high of last fall. In the Depression, it dropped more than 80 percent. Unemployment is about 5 percent. In the Depression it was 25 percent.
Maybe 2 percent of mortgages are in trouble, and abandoned homes line some parts of Cleveland Heights. During the Depression, more than half of Clevelandwas underwater. Today, one big bank has collapsed. In 1931, 1,400 banks collapsed.
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