The U.S. economy is facing some serious challenges ahead. Looking at the current economic climate it feels eerily similar to the 1937-38 recession that occurred during the Great Depression. Some think that the Great Depression occurred overnight on a gloomy day in October of 1929 but we had a decade long build up of rampant speculation and bad investments that led up to the crash. The bottom hit in 1932 and 1933 with unemployment soaring to 25 percent. Yet the story never ended on that date. Throughout theGreat Depression even with massive government spending the unemployment rate remained above 15 percent for all of the 1930s. Without a doubt the early success that occurred for the government after 1933 was largely based on government spending. However government spending back then was largely focused on the working class while today most of the stimulus has been shoveled to the financial industry. It is helpful to look at history as a guide since we are facing many similar issues today even though things seem to be stable for the moment.
This is part 30 in our Lessons from the Great Depression series:
Read the rest at Economic déjà vu from the 1937-38 recession: Lessons from the Great Depression part 30. With financial bailouts and government spending pulling back are we setup for a double-dip?