The media are constantly comparing the current economic and market conditions to that of the Great Depression during the 1930s. However, the economic conditions are dramatically different today in Montgomery County and the United States then they were 70 years ago.

For example, here are some statistics:

  • Montgomery County’s Gross Domestic Product (GDP) increased 1.5% in 2008 versus 2007.
  • The United States’ GDP was up 1.2% in the fourth quarter of 2008 over the fourth quarter of 2007.
  • Revenue during the fourth quarter of 2008 for the Dow Jones Industrial Average (DJIA) was down only 6% compared to the fourth quarter of 2006.

The 28 non-oil and gas components of the DJIA booked revenue in the fourth quarter of 2008 that was 3% higher than the fourth quarter of 2006. (Oil companies’ revenues have suffered from the drastic decline in oil prices. However, the non-oil companies have benefited from the declining oil prices).

Though the above statistics are disappointing, they don’t justify the continuous comparisons of today’s market conditions to that of the Great Depression. Contrary to what the media and some politicians say, neither the United States’ nor Montgomery County’s economy is in as dire a shape as some would have the American public believe. David Blatt, chief economist for Montgomery County’s Department of Finance says the county is forecasting over 2% GDP growth during 2009.

The Depression of the 1930s was notable among depressions not only for its severity but also for its duration. The statistic which best represents the social impact of the Great Depression is the unemployment rate.

While the economy recovered from its worst state in 1933, the unemployment rate remained at about 15% for the rest of the decade. The unemployment rate did not drop from the Great-Depression levels until the economic impact of World War II was felt. Today, our country’s unemployment rate is approximately 8.5% and is expected to go as high as 10%, but no one is predicting that the unemployment rate will reach the 20%-plus rate of the 1930s. In Montgomery County, the unemployment rate for the month of February was only 5.1%–though it was the highest rate we have seen since 1990. A rate of 5.1% is still dramatically lower than and national and state unemployment rates. While the unemployment rate should be the defining characteristic of economic depression, the standard definition is in terms of the Gross Domestic Product (GDP). The output of the economy is measured by its GDP. During the 1930’s the decline in production from its high point in 1929 to its low point in 1933 was over 50%.

It is true that during the 26 years I have been managing money, the current financial and economic market conditions are the worst I have lived through. However, the current market conditions are not as bad as the 1930s. In fact, while the economic conditions in Montgomery County have certainly slowed, there is no comparison to my grandmother’s depression. In addition, I strongly believe that both the past and current administrations, as well as the U.S. Treasury, have made the correct “big-picture” moves to stimulate our economy.

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Please be aware that you are leaving www.kendallcapital.com and will be redirected to a third party website. Kendall Capital has no control over information at any third party site accessed from www.kendallcapital.com. Kendall Capital makes no representation and is not responsible for the quality, content, nature, or reliability of any linked site. The inclusion of any link does not imply endorsement, investigation, verification or monitoring by Kendall Capital. In no event shall Kendall Capital be responsible for your use of a third party site. Thank you for visiting Kendall Capital's website.

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Please be aware that you are leaving www.kendallcapital.com and will be redirected to a third party website. Kendall Capital has no control over information at any third party site accessed from www.kendallcapital.com. Kendall Capital makes no representation and is not responsible for the quality, content, nature, or reliability of any linked site. The inclusion of any link does not imply endorsement, investigation, verification or monitoring by Kendall Capital. In no event shall Kendall Capital be responsible for your use of a third party site. Thank you for visiting Kendall Capital's website.

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