Originally posted on Chicago Tribune
In the effort to advance an agenda, political leaders have been known to hype the perils ahead. Like those commercials that warn, “Act now while supplies last!”, the demands for action exaggerate in the hope of spurring a rapid response. That’s how it sounded when President Barack Obama spoke in Elkhart, Ind., last week.
Exhorting Congress to pass his fiscal stimulus package, he invoked the specter of the Great Depression, warning that “if we don’t act immediately, millions more jobs will be lost, and national unemployment rates will approach double digits” and that the nation could “sink into a crisis that, at some point, we may be unable to reverse.”
Unable to reverse? Not likely. The Congressional Budget Office recently forecast that even without an economic stimulus, the economy will grow in inflation-adjusted terms by about 1.5 percent in 2010—hardly robust, but certainly not a decline.
The parallels with the Great Depression are, at the moment, extremely far-fetched. Back then, unemployment afflicted a quarter of the labor force. Right now, the unemployment rate stands at 7.6 percent. The CBO says absent a stimulus, it could reach 9 percent. In the 1981-82 recession, by contrast, unemployment topped out at nearly 11 percent.