Some regions of the country are experiencing unemployment rates not seen since the Great Depression. Economists say we're not in a depression; but we are in a serious recession. (Photo courtesy CNN)
Story Created:
Jan 29, 2009 at 6:55 PM EDT
Story Updated:
Feb 2, 2009 at 1:17 PM EDT
The unemployment rate in Michigan has soared to 10.6 percent — its highest level since late 1984. But they’re not alone.
Elkhart County leads the state and the country with 15.3 percent unemployment — numbers that are rivaling the Great Depression.
You can't read the paper or turn on the TV without seeing heartbreaking headlines, like job cuts, economic crises, and foreclosures.
So is this recession turning into a depression?
Michael Pries, an economics professor at Notre Dame, says no.
"Between 1929 and 1933 the GDP — which is our best measure of what the economy produces — declined by 30 percent,” Pries said. “In the current context it has declined by about 1 percent, since last year. So we’re clearly not there yet.”
And here is how the numbers break down nationally:
In the 1930s unemployment was at 25 percent
In the 1980s unemployment was at 10.8 percent
In 2009 unemployment is at 7.2 percent
Economists believe unemployment may continue going up, but not enough to be classified as a depression.
"Some regions of the country are particularly dependent on certain industries, and if certain industries such as the RV industry take a particularly hard hit from the downturn, those regions will suffer worse,” Pries explained.
Professor Pries says unlike the depth of the depression, the Federal Reserve is acting fast.
"The lowering of interest rates to try to stimulate investment and to try to stimulate consumption,” he continued, “and what the Fed is doing right now is really unprecedented in terms of being aggressive with their monetary policy.”
In the long run, experts predict the economy will recover; but some worry at what cost.
"Unnecessary debt due to unnecessary spending that would leave us with a level of debt that requires us to raise taxes to extremely high levels,” Pries added.
The bad news economists are predicting more job loss over the next six months with a turnaround after that.
What do local economists say about President Obama's stimulus bill?
The major worry is that the bill needs to have an impact over the next year when the situation is the most severe. Some fear the bill will only start to take effect after the economy has already started to recover.
