I find it weird (and irritating) that the press and some economists are throwing labels at the current crisis without an ounce of analysis. When one says “this is the worst recession in the last XX years” I want to know exactly why that is.
Our current unemployment level is 6.1%. So this ‘recession’ (we are not even there officially) is only the worst in the last 5 years (Sept 2003 had unemployment of 6.1%). We would have to get a number higher than 10.8 (December 1982) to get the “worst recession since WW2”.
Again, the actual data tells us that we are not even in the same levels of decline we saw in 2001. So the most you could say is that this is the worst time in the last 7 years. We are not even close to the 1990 recession (1990/04: -2.9894, 1991/01: -2.0249) and ages away from 1981 (1981/04: -4.8909, 1982/01: -6.3990).
How about the duration of the recession? The ones in 1973 and 1982 lasted 2 years. So even if the infamous Roubini is right, we would only get to the same level of those two.
Besides all of that, the current social safety net provided by government today is immensely larger than it was 20 years ago (and the difference with what people had in 1929 is almost unfathomable). Furthermore, people have many more options today to ride through the storm. Credit is still available as never before, women can work normally so families have now two potential bread winners, and since everyone is simply richer than before, private assistance is much larger and available.
It is true that the stock market declined a lot (even though we are still at the same levels we had only 4 years ago) and consumer confidence is extremely low. But these are really “soft” indicators – they reflect how people expect things to turn out. That is why the market wen’t up after the latest GDP report even though it was negative.
That is why I believe that all the gloom and doom is just a cheap trick for trying to sell newspapers and elect Obama.