Comparison of the Great Depression (1929-1930) and the Great Recession (2007-2009) - Unemployment Essay Example
The United States of America has gone through many different economic ups and downs, 2 of the most horrific downturns being the current recession and The Great Depression last from about 1929 to 1939 - Comparison of the Great Depression (1929-1930) and the Great Recession (2007-2009) introduction. While these two deflationary periods in our economy have several differences, they posses many more similarities in the events that lead up to them along with a high unemployment rate and the difficulty in receiving a mortgage or loan from a bank.
The origin of these two economic events cannot be blamed on one single person or a group, but on the United States as a whole who neglected to fulfill their economic duties. This comparative essay will show the similarities and differences between The Great Depression and the Recession of the 2000’s. These two economic hardships posses very similar origins. They both started out with a sharp increase in technological advancements (Econ). Just before the great depression the first automobile was invented.
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With this came other engine powered appliances like refrigerators and washing machines. The same occurred in the recent recession. When computers first came out they were highly expensive and most people had no need for them. In recent years computers have become an important part of the United States day to day life thus becoming cheaper and more available to the public. One would expect this to help our economy to grow, but not everyone has the money to buy these new technologies upfront so they purchase them on credit.
In the 1920’s it was known as installments, today it is known as the credit card. Both are the same concept, you get the product now, and then you pay back the original price along with a certain amount of interest. It is a great concept in theory, especially since the companies are earning money on the interest but when too much credit is given out it can adversely affect the economy. There is a type of credit known as a mortgage; mortgages are used just like really bit loans used to pay off the price of a house over several years.
An excess amount of this large loans are another factor that lead to the recession in recent years. When large amounts of loans are handed out there are always a few that are not able to be paid back because the consumer didn’t not earn enough to make a payment that month. When this occurs the Bank or loan company repossesses the product (i. e. house, car, refrigerator etc. ). Now the bank owns the house but with an already failing economy there is no one to purchase the house, thus continuing the downward spiraling economy.
Just before our economy started to collapse, large numbers of products like houses and automobile were being manufactured to supply for the consumers excessively increasing demand. By now everyone in the country is affected and no longer want these luxury items. This leaves an excess of products that no one can afford which in effect puts companies out of business and the employees out of work. The people with stock in these companies immediately take their money out of the stock market.
In result the whole market goes down in value and in effect people panic and take all of their money out of the market causes it to crash like in October of 1929. When the stock market crashed all the money that was still invested was lost and there was no way for it to be repaid to the stock holders. This event caused people to lose all trust in banks and the stock market only adding to the length of the depression because there is no way for a market to get back on its feet if money is not invested.
Unemployment rates sky rocketed after the crash, by 1933 one in four American looking for work could not find steady work. The unemployment rate would not reduce to under two percent until world war two. Men were able to go to war and be paid for it and women were able to stay at home and work at factories manufacturing products ranging from uniforms to airplanes. All the manufacturing boosted the United States economy pulling them out of their great depression. The Great Depression and the recession have more similarities than can be named in this essay.