At the Democratic convention last week, James Pethokoukis had some fun asking delegates economic questions:
I asked 24 of them whether the economy was in an expansion, a recession, or in a depression. The results are stunning, I think, given that on the same day I took the informal survey, the Commerce Department reported that the economy grew at a revised 3.3 percent annual pace in the second quarter. The numbers:
1) 12 percent said “expansion”
2) 25 percent said “recession.”
3) 63 percent said “depression.”
Jimmy P. seems to see this as evidence of the economic illiteracy of the Democratic delegates. The ill-informed answers he got to a question about tax rates offer some backing for this view. Even with questions being raised about that 3.3% growth figure, we certainly aren’t in anything even approaching a 1930s-style Great Depression.
But I do wonder if we’ll eventually look back at the Oughts as an economic lost decade, sort of like the 1970s. There were some good growth quarters in those days, too (16.7%, in the second quarter of 1978, was the high point–the economy was a lot more volatile back then). But on the whole it was a time of prolonged economic stagnation and distress. Which is true of the current decade as well (in fact, growth has been even slower so far in the ’00s than it was over the course of the 1970s).
What we’re going through is an economic episode much longer and more significant than a standard-issue recession. It started with the stock market collapse of 2001-2002, was temporarily shoved aside by the housing bubble, but is now back and may stick around for a while. It’s not a Depression. But it may be a depression.