Sunday, October 3, 2010

GDP growth during the Great Depression and 2010

I am writing this post because I wanted to lean more about whether government intervention in the economy helped during the Great Depression.

I was listening to "progressive" talk radio the other day and one of the hosts talked about how government intervention in the economy during the Great Depression led to growth in our GDP thus getting us out of the Depression. The host then advocated government intervention, specifically the trillions that have been spent over the past few years, to get us out of our depression (I use this word) today.

What I found:

From 1932 to 1940, GDP grew from about $600 billion to $800 billion. Thus, the GDP grew about 33% as a result of government intervention.

Today, the numbers are much different:

"The Commerce Department presents these revisions dispassionately, noting that the changes in real GDP are being revised down for all three years in the 2007-2009 time span: : 0.2 percentage point for 2007, 0.4 percentage point for 2008, and 0.2 percentage point for 2009. "

What I learned:

I learned that our current GDP growth is remarkably low. I also learned that the GDP wasn't really as bad as the economists, politicians, and media made it out to be. Finally, I learned that today's intervention has not led to anywhere near as much GDP growth as in the Great Depression.

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