CNN posted an article today entitled, “Bloody Monday”—referring to the host of layoffs that major companies have been announcing due to the recent economic downturn.
The final week of January began with a bloodbath for the job market, as over 71,400 more cuts were announced on Monday alone.
At least six companies from manufacturing and service industries announced cost-cutting initiatives that included slashing thousands of jobs.
More than 200,000 job cuts have been announced so far this year, according to company reports. Nearly 2.6 million jobs were lost over 2008, the highest yearly job-loss total since 1945.
Back in October, people were comparing the stock market crash to that of the Great Depression—but it seems odd, given our perceptions of the events of that time period. Our lifestyles didn’t change much in the last three months—we didn’t have a lot of capital tied up in the stock market or the housing market, so when things dropped we were relatively unscathed. But even looking around, it doesn’t seem like the Great Depression at all. Was it really like this back in the ’30s? A graph of the stock market crashes over the past hundred years shows that the current recession is looking depressingly similar to that of 1929—it’s certainly worse than any crash since then. But it doesn’t feel like a Great Depression, does it?
Well, I decided to look up a Great Depression timeline of events. Perhaps the poverty and destruction of wealth we associate with the Great Depression didn’t happen immediately in the few months after the stock market crash, but took longer to manifest themselves? Perhaps this is what it was like three months after Black Tuesday—nobody really thought it would be a big deal, and weren’t directly affected by what happened initially. timeline says that, after a few months, not much had happened:
By the end of 1930 (the equivalent of our end of 2009), the GNP had fallen 9.4 percent from the previous year. The unemployment rate had climbed from 3.2 to 8.7 percent—nowhere near the 15-20% unemployment rate we typically associate with the Depression. (In comparison, in December 2008 the unemployment rate rose to 7.2 percent. I don’t know what it will be at the end of January, after the fallout of “Bloody Monday”.) I’m not sure what the GNP or unemployment rate will be at the end of this year, but I don’t see 1930-type levels as being unrealistic.
1932 and 1933 were the worst years of the Great Depression—the equivalent of our 2011 and 2012—with GNP falling 31 percent compare to 1929, and unemployment at 23.6 percent. Industrial stocks had lost 80 percent of their value since 1930. 40% of all banks that existed in 1929 had gone under.
What will our 2011 and 2012 look like? Obviously the market has some “adjusting” to do. Will it finish its adjustments by the end of this year, and be on its way back up soon? Or is this only the beginning, with 2009 looking positively sunny compared to what is yet to come?
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