With support from the University of Richmond

History News Network

History News Network puts current events into historical perspective. Subscribe to our newsletter for new perspectives on the ways history continues to resonate in the present. Explore our archive of thousands of original op-eds and curated stories from around the web. Join us to learn more about the past, now.

The important way the 2008 crisis was worse than the Great Depression

Now that we have a little historical distance from it, we can definitively say the 2008 financial crisis was nowhere near as bad as the Great Depression except in the way that mattered most: how we recovered from it. By that measure, we’re actually on track to do quite a bit worse this time around.

How is that possible? The easiest way to think about this is we’re comparing how much we reasonably could have expected the economy to grow if there hadn’t been a crash with how much it actually did. The relevant question, then, is whether the recovery was strong enough to make up for all the ground we not only lost during the recession but also didn’t gain during that time but “should” have. In other words, whether the economy was able to get back to its pre-crisis growth trend or was permanently pushed onto a lower path.

Now, while it certainly took awhile — and had the benefit of a massive stimulus project known as World War II — the important thing is the economy did eventually bounce all the way back from the Great Depression. It wasn’t always clear that it would, however.

Read entire article at Washington Post