The CNN/Opinion Research Corp. poll, which surveyed more than 1,000 Americans over the weekend, cited common measures of the economic pain of the 1930s:
- 25% unemployment rate;
- widespread bank failures; and
- millions of Americans homeless and unable to feed their families.
First these are the three measures and the last two are already happening. There are widespread bank failures and people are panicking. There are millions losing their homes and many states are now trying to stop or slow the foreclosures. The only thing missing is incredibly high employment rate. So lets take a look at the poll results-
In response, 21% of those polled say that a depression is very likely and another 38% say it is somewhat likely.
The poll also found that 29% feel a depression is not very likely, while 13% believe it is not likely at all.
Now onto what the experts say -
"We've been in a recession all year and it's going to get worse," said Anirvan Banerji, director of research for the Economic Cycle Research Institute. "We're going from a relatively mild recession to a more painful recession. But we're a long, long way from a depression."
Other economists recently contacted by CNNMoney.com said that the unemployment rate could rise as high as 10% to 12% next year if the bailout does not work. While that could be roughly double the current 6.1% unemployment rate, it would be only half of the worst rate seen in the Great Depression of the 1930s.
And experts believe that the Federal Reserve and other officials made many policy mistakes during the Depression that are not likely to be repeated. In fact, the Fed at that time kept lending tight, while today's Fed is pumping hundreds of billions of dollars into the banking system to try to restart lending and spur economic activity.
"The fact that the majority of people believe we are going into a depression ensures that the recession will get worse," Banerji said.
The recession is here - how bad and how long depends a lot on how much the current and future policies work. Just because we are doing the opposite of what was done during the depression does not mean that the policies will prevent one, nor does it mean that things are inevitable. Until we fully understand the problems we will not be able to implement the correct solutions. And it sounds like many people do not think we will be able to implement the correct solutions regardless...