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In: Economics

what was the extent of economic decline in the Great Depression and the Covid 19 recession,...

what was the extent of economic decline in the Great Depression and the Covid 19 recession, in terms of GDP and unemployment?

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According to the U.S. Bureau of Labor Statistics, at present, the percentage of unemployment is around 15%. This figure has been wavering around this estimate as more layoffs and employment cuts are being reported. Compared to this, during the Great Depression, estimates indicate the unemployment percentage was about 25%. Unemployment levels within the US reached about 25% between 1929 and 1933 while in UK, unemployment levels reached about 15.5% during an equivalent time.

Also, in the 1930s, US GDP declined significantly by 8.5% in 1930. It further shrank by another 6.4% in 1931 and a further 12.9% in 1932 as per records. In the current scenario, IMF (in the world Economic Outlook for June) has predicted a fall in  GDP by 8% in 2020 followed by a GDP Growth of 4.5% in 2021, reflecting expectations of a quicker economic recovery from the pandemic.

The complete impact and comparison of both these economic crises cannot be assessed at present. This is because the trajectory forward is very difficult to estimate as dates of a potential vaccine have not yet arrived. This means that uncertainty still looms and an impending domino effect cannot be ruled out.

Rahul Sunny answered 1 year ago
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