Great Depression And Economic Condition

Posted by Nicole Brown

at July 7, 2009

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Recent economic condition is the subject of worry. Some people said this recession has the latent to be the threat to the American economy since the Great Depression. Let’s give the light at the similarities and the differences between current economic situation and the Great Depression.

The Great Depression was the most significant factor in the U.S. economy. One of the major factors that caused the Great Depression was the splendidly asymmetrical allocation of wealth among the rich and the middle class people. In the 1920’s, the top 1% of all Americans had a joint earnings equal to the bottom 42% while nowadays the top 5% richest Americans have a combined income equal to the bottom 53% so it is approaching a dangerous point in the economic state.

One more cause of the Great Depression was the wide stock market rumors that occurred in the late 1920’s. That’s why the market got to artificially high prices. To see these prices, investors involved for quick ways to make money. However, the market finally reached a regardless investing of the company’s earnings. This unselective investing was the reason of artificial highs in the prices of stocks and called Black Tuesday.

As same, our recent economic recession has been described by thrust in the housing market and investments in property. But fortunately, this is a good sign for the economy. In contrast to the great depression where gossips caused unnaturally high prices, the current recession does not have artificially high supply prices.

In the 1920’s era, the automotive industry was one of the reasons behind the booming economy and the automotive industry was never in any major trouble. But today, automotive industries are loosing value and they are in difficulty so we could see an important downturn in our current wealth and possibility to turn into a depression.

Great Depression was a horrible time for our economic system. The causes are totally different, and not as terrible. If one of the big three automotive makers fails in the coming months, the stock market will likely be unstable for the next few months or years. We will not see an extended depression as1930’s.

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