Is Greece Worse Off Than the U.S. During the Great Depression?

9/7/2015

By LIZ ALDERMAN, LARRY BUCHANAN, EDUARDO PORTER and KARL RUSSELL   

The economy has been in disarray. People have been out of work for years. The banks have been running out of money. It sounds a lot like the Great Depression in the United States. But it is Greece – and in some ways, the situation is worse.

“Greece is in its own Great Depression. But unlike the United States, it won't be able to get back on its feet as quickly,” said Jacob Funk Kirkegaard, an economist at the Peterson Institute for International Economics in Washington. Greece “is shackled by onerous rules and regulations, an aging population and a dysfunctional domestic political system,” he added, and the country is “sharing important elements of sovereignty with its own creditors.”

An Economic Crisis

Government spending helped pull the United States out of the Great Depression starting in 1933, and decoupling the dollar from gold helped. Though the economy slipped back into recession in 1937, the onset of World War II and furious military spending helped the country recover for good.

Greece hasn’t had its own currency since it joined the euro, and an inefficient bureaucracy has long failed to improve tax collection or to trim its bloated government. At this point, Greece is just struggling to pay its bills, as it tries to secure aid from Europe.

Gross domestic product: US 1933 -26% (red) Greece 2013 -26% (blue)

Percentage change in annual G.D.P. since 1929 in the U.S. and since 2007 in Greece

Wary Job-Seekers

The American government helped bolster the employment market in the 1930s, by pouring billions of dollars into public jobs. Amid a bleak financial picture, unemployment in Greece remains extremely high, with more than a quarter of job-seekers unemployed and youth joblessness now topping 50 percent.

 Unemployment rate, monthly:  US May 1933 26% (red) Greece July 2013 28%

Seasonally adjusted

Shaky Stocks

After losing billions of dollars on Black Tuesday, Oct. 29, 1929, the market spiraled. A few years later, the market began to bounce back. The volatility in Greece, which began during the global financial crisis in 2008, continues, as investors remain wary of the country’s prospects.

Greek vs. U.S. stock market: Dow July 1932 -89% (red) Greece June 1912 -91%

Percentage change since the Dow industrials peak in September 1929 and the Athens Stock Exchange General index peak in October 2007.

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