Real GDP contracted annually by about 8%, 6% and 13% in the first three years of the Great Depression, for a cumulative decrease of more than 27% (see chart above). According to the Philadelphia Federal Reserve Survey of Professional Forecasters (released February 13, to be updated this Friday), real GDP will contract this year by -2.0 before increasing by 2.2% next year. Even if real GDP contracts by much more than 2% this year before returning to positive growth next year, it will be nothing close to the contraction in real GDP of the early 1930s.
Related: See guest Freakonomics post “This is Not Another Great Depression,” which concludes: “We are experiencing pain now, but the problems of the Great Depression were several magnitudes greater.”
Related: The White House is projecting that the nation’s economy will shrink by 1.2% this year and increase by 3.2% next year. In addition, it projects that “by the end of this year,” the economy will be growing at a 3.5% annual rate.