In late 2007 the United States economy went into a tailspin. The stock market dropped like a lead elephant while the only thing going up, it seemed, was unemployment. Predictably, commentators soon began to make doomsday comparisons between the "Great Recession," as it became known, and the Great Depression of the 1930s. But was this really a repeat?
Certainly, the similarities were concerning. Both were preceded by periods of prosperity. Both came at a time when banks were experimenting with new ways of doing business (consumer credit in the 1920s and pooling mortgage debt in the 2000s). Both even followed asset bubbles, which occur when prices exceed what something is actually worth (Florida real estate and the stock market in the 1920s, and tech companies and real estate in the 2000s) [source: Geewax]. And then there was the sharp stock market decline in the first 18 months after the initial crash: 45 percent during the Great Depression and 54 percent during the Great Recession [source: Jacobsen].
By and large, however, the Great Depression was much worse. Its 43-month duration made the 18-month Great Recession seem mild by comparison. In the period after the 1929 crash, unemployment went up 19.3 percentage points compared to rising just 5.7 percentage points after 2007. And remember all the banks that failed during the Great Recession? There were 443, which seems high until you consider that some 9,000 closed during the Great Depression [source: Geewax]. Ouch.