Is Unemployment the Worst Since the Great Depression?

By Matthew Bandyk  USNEWS The “Great Recession” is the name that has stuck for the economic decline that began in late 2007. But there’s some reason to think that using the word recession is being kind.

The U.S. gross domestic product has shrunk 3.9 percent in the past year, the worst drop since the Great Depression. Plenty of observers are willing to say that this recession is much deeper than anything we’ve seen since the 1930s–including the big dip in the early 1980s, generally accepted as the other candidate for the worst recession since the Great Depression. “I think it’s way worse today,” says Ridgely Evers of Tapit Partners, a longtime entrepreneur and venture capitalist who founded the software company Netbooks (now known as WorkingPoint). In the recession of 1981 and 1982, “people recognized it as a dip. [Today,] nobody thinks we are going to come back out in relatively short order.” This recession seems to have dragged on longer. According to the National Bureau of Economic Research (NBER), the U.S. economy was in recession from July 1981 to November 1982–16 months. But the current recession started in December 2007, says the NBER, so it’s already longer than the last big one.

The NBER defines a “recession” based on the all-encompassing gross domestic product figure. That economy-wide statistic may not mean much to the average American. In other words, the question “What is the economy’s output?” usually doesn’t matter as much as “How hard is it to find a job?” When we look at that question, how does the “Great Recession” compare?

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