Then and now
Smith’s argument seems to resonate with a lot of TikTok users, and for good reason. Wages in the U.S. have stagnated for decades, even as productivity increased much faster. The video on “silent depression” has received 8.7 million views and over 781,000 likes.
While the costs of many necessities like housing and transportation have increased disproportionately compared to average incomes, it’s important to note that there are other fundamental factors that characterized the Great Depression.
For instance, during the Great Depression, America experienced significant unemployment, leading to widespread poverty and hardship. For several months in 1933, the U.S. unemployment rate exceeded 25%.
America is not grappling with those kinds of numbers today. According to the Labor Department’s latest jobs report, nonfarm payrolls increased by 150,000 in October 2023, while the unemployment rate was 3.9% for the month.
Moreover, the Great Depression was precipitated by a catastrophic stock market crash. On October 28, 1929, dubbed "Black Monday," the Dow Jones Industrial Average fell by nearly 13%. The next day, labeled "Black Tuesday," saw an additional drop of nearly 12% in the market.
This downward trend persisted until the summer of 1932, at which point the Dow had plunged 89% from its peak. Countless people saw their investments evaporate, leading to a severe decline in the public's confidence in the financial system.
Fast forward to the present, the investment climate appears significantly more favorable and stable: the Dow has climbed 9% in 2023 and is up more than 48% over the past five years.
Additionally, the Great Depression was characterized by a substantial contraction in economic output. From 1929 to 1933, real GDP in the U.S. fell by 29%.
Such a contraction is not evident in today’s economy. According to the most recent estimate from the Commerce Department, real GDP in the U.S. increased at an annual rate of 5.2% in the third quarter of 2023, up from the initial estimate of 4.9%.
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