You might look at the title of today's post and call it sensationalism. However, it is a fair question. An economic depression is defined as an economy that has an economic contraction greater than -10% and a recession that lasts for more than two years. The jury is still out on how long this will last. However, today it was reported that the economy lost -32% in the second quarter. You could sugar coat that number by saying that everyone was expecting it. Let's wake up to the reality that -32% is a horrific number and a number that shows what is really occurring in our economy.
This growth number is the worst on record and the only time since 1958 that there has been a double-digit decline. Between the Fed and the government, roughly 6 to 7 trillion has been pumped into the economy and markets. Can you imagine what things would look like without the stimulus?
Finally, the unemployment situation is not getting any better. Today it was reported that another 1.4 million people filed for unemployment benefits this past week. It is a troubling trend that 1.3 to 1.4 million people a week are showing up as newly unemployed. The government reports the unemployment rate at 11%, which is not even close to being a good number -government accounting.
It is reported that 32 million people are getting unemployment benefits. It is also said that only 1 out of 4 people who are unemployed are receiving benefits. If both of those numbers are correct, that means 128 million people are unemployed. There are only 327 million people in America, according to the latest census numbers. If you take those 237 million people and look at the ones eligible to work, that 327 million becomes a lower number. That would put the percentage rate of unemployed much higher than the Great Depression.
With these numbers already greater than the great depression, we are on a concerning track for sure. Only time will put a label on this period of our history.