Are we in another Great Depression? Why or why not?

Question

With GDP & unemployment levels likely topping the Great Depression how will this impact your market & investing?

For myself I know the builders in process of building $2200 a month Class A+ rentals all around north dallas suburbs are going to be in a world of hurt.

My discussion 3 years ago on this topic was really active yet no one thought it would happen anytime soon.

The truth is this virus & our over-reaction to it has exposed the true weaknesses of our system & Keynesian Economics.

We need biblical/Austrian economics & savings & investment now more than ever not more stimulus with money our grandkids don’t have, stimulus & federal reserve shenanigans!

Kristina Sparrow · Answer

The difference is this is a government induced downturn rather than a market induced like in the past. The government forced shutdown of nearly all businesses and the recovery is likely to be dramatic once the shelter in place mandates are lifted or lessened. I've watched a lot of state of the market presentations over the past few weeks and the consensus seems to be that GDP will start to recover in 3Q and substantially pick up in 4Q. That being said, GDP growth is still projected to be negative in 2020. Return to long run equilibrium isn't likely until 2023.

Karl B. · Answer

One would think the 20+ trillion in debt would cause a depression but they keep printing money and so that isn't an issue (not to the media and most people anyways).

I'm hoping this experience will cause more goods to be made in America = more jobs.

Shutting down sectors of an economy will cause job loss though a lot of these jobs (retail, restaurant, etc.) will return when the quarantine is over. That being said, some of these businesses won't reopen due to financial constraints or the owners deciding to move on.

It's going to be interesting to see what happens and no doubt this economic disaster will be studied for thousands of years (that is, if governments manage not to blow the earth up).

Jeffrey Furtado · Answer

We will not be in a depression. As stated by others, this was intentionally induced and numerous monetary measures and mechanisms have been put in place to mitigate and minimize the damages.I have no doubt that even after the pandemic has receded/subsided that there will be numerous more policies and mechanisms put in place to mitigate further.

I could fill pages on items I could discuss at length, but the more important one would be that the Gov't did little to nothing to mitigate the last Depression. There is speculation (although I would say much of that is factual) that the Gov't assisted in the start of the Depression. There is undisputed evidence (one of which is  the Gov't admitting to the fact) that they prolonged the last Depression by at least 7 years.

This is coming from someone who has been also saying for 3 years now that this cannot continue. Housing cannot go up and up and up with no end, employement can not always be at record breaking lows, stock market cannot always be at record breaking highs -- all while debt load has hit record highs as well, and that a recession should have already occurred in 2017, 2018, 2019, but the Governments did everything they could to keep the economy artificially propped up each of those years. I am not a sheep who believes in what I wrote above (no depression occurring) because I need to believe that because I am fearful, or in fear of losing money, or I won't be able to sleep at night. I'd be fine either way financially.Now the human side of me say's  God no I do not want it to happen because people around the would suffer so greatly. But my humanity or caring nature does not in any manner factor in to my stated facts and opinion on why a depression will not happen.

Diane Dono · Answer

We may end up being, we'll see with the amount of Government$$ to help businesses and people out there, time will tell.  There definitely will be winners and losers.... some businesses will expand or be created to fill reliable needs now made clear by this, and to shelter them better if something like this happens again.  Others that were barely hanging on will go out of business, regardless of if there is govmt assistance available to them.  I have faith in the resiliency of the U.S., although it can take a lot more time than we hope to recover.

Are we in another Great Depression? Why or why not?

Most Popular Reply