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Brad Bollinger: Think 5.5 percent jobless rate is bad, try 25 percent

One hears it more often lately in casual conversation – things like “the economy is the worst since the Depression.”

That is, of course, both patently false and a bit dangerous with its potential to breed unnecessary pessimism.

Surely this is a difficult economy in many ways, although certainly not all. But the Great Depression it isn’t.

Currently, the U.S. unemployment rate stands at just 5.5 percent. Economic growth is very slow at 0.6 percent or is declining. Banking and housing remain the weakest areas nationally. The Dow Jones industrial average is off about 20 percent from its October high.

But consider that between 1929 and 1932, the Dow Jones index fell from 380.33, as a recent Wall Street Journal column said, to 41.22, a decline of nearly 90 percent.

The unemployment rate in 1933 was nearly 25 percent. The FDIC has taken over 15 banks this year. In 1933 alone, 4,000 banks failed. Millions of Americans lost their life savings and their homes.

There are, unfortunately, some political similarities between the onset of the Great Depression and today, in particular the growth of anti-globalization and withdrawal from free trade.

In 1930, Congress passed the Smoot-Hawley Tariff Act imposing higher U.S. tariffs on 20,000 imported goods. More than 1,000 economists signed a petition opposing the bill.

Today, opposition to expanding free trade has stalled new agreements with countries such as Colombia that would increase trade between one of America’s best friends in the region.

But even more destructive is a growing lack of will to attack problems. We can’t drill for oil. And we can’t develop solutions to health care or the impending financial train wrecks of Medicare and Social Security.

No wonder Congress has a historically low approval rating of just 9 percent.

It’s as if this was 1979 and Jimmy Carter was preparing to deliver his now famous malaise speech. Some are even comparing U.S. today to the fall of Rome.

It’s all rubbish, of course, unless we really start believing it.

•••

Brad Bollinger is editor in chief and associate publisher of the Business

Journal. He can be reached at bbollinger@northbaybusinessjournal.com or 707-521-4251.