Great Depression vs. Now

Then:

Unemployed men queued outside a depression soup kitchen. Image source: https://commons.wikimedia.org/wiki/File:Unemployed_men_queued_outside_a_depression_soup_kitchen_opened_in_Chicago_by_Al_Capone,_02-1931_-_NARA_-_541927.jpg

Now:

1. Stock market crash

Photo by Uwe Conrad on Unsplash

Then:

The 1920s saw a nearly 500% increase in the DJIA, followed by the loss of more than all of the gains from 1929–1932. Source Macrotrends (commentary my own): https://www.macrotrends.net/1319/dow-jones-100-year-historical-chart
The value of cash was high during the depression because of the massive price deflation brought on by the crash.

Now:

Investor Bill Ackman’s emotional plea to shut down the country on March 18th marked a low point in the 2020 crash.
S&P 500 hit its recent low (potentially temporary), on the exact day the Fed announced its unlimited QE program.

2. Debt

Aggregate public and private debt combined 1870–2010. Source: http://www.bea.gov/, Author: Bureau of Economic Analysis, Federal Reserve

Then:

Image source: https://commons.wikimedia.org/wiki/File:Germany_Hyperinflation.svg

Now:

Fed balance sheet has doubled since the pandemic shut down the economy. Board of Governors of the Federal Reserve System (US), Assets: Total Assets: Total Assets (Less Eliminations From Consolidation): Wednesday Level [WALCL], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/WALCL, April 29, 2020.
Source Macrotrends: https://www.macrotrends.net/2015/fed-funds-rate-historical-chart
BOJ balance sheet. Bank of Japan, Bank of Japan: Total Assets for Japan [JPNASSETS], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/JPNASSETS, April 29, 2020.
ECB balance sheet. European Central Bank, Central Bank Assets for Euro Area (11–19 Countries) [ECBASSETSW], retrieved from FRED, Federal Reserve Bank of St. Louis; https://fred.stlouisfed.org/series/ECBASSETSW, April 29, 2020.
Political instability could continue to develop as inflation and unemployment rise in countries without access to US dollars.

3. Unemployment and Wage Stagnation

US unemployment from 1910–1960

Image source: https://commons.wikimedia.org/wiki/File:US_Unemployment_from_1910-1960.svg. This file is licensed under the Creative Commons Attribution-Share Alike 4.0 International license. No changes made.

Then:

Now:

The number of people filing to receive unemployment benefits hit the highest level ever as the economy was locked down. Source Macrotrends (commentary my own): https://www.macrotrends.net/1365/jobless-claims-historical-chart
The labor force participation rate has been in a steady decline since 2000. Image source: https://fred.stlouisfed.org/series/CIVPART
Image source: https://commons.wikimedia.org/wiki/File:U.S._incarceration_rates_1925_onwards.png
Since the 1980s there has been a disturbing correlation between manufacturing employment and the incarcerated population in the United States.
Comparing manufacturing employment to the incarcerated population in the US.

4. Inequality

Over 20% of the share of total income went to the top 1% of the population in the 1920s and 2010s.

Then:

Now:

Image source: https://commons.wikimedia.org/wiki/File:Productivity_and_Real_Median_Family_Income_Growth_in_the_United_States.png
Income inequality is at levels not seen since the 1920s.

5. Asset bubbles

The CAPE ratio is a valuation measure applied to the S&P 500 or a similar index which divides the price by its average earnings over a 10 year period and adjusts for inflation. Image source: https://commons.wikimedia.org/wiki/File:SP_500_Price_Earnings_Ratio_(CAPE).png. This file is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported license. No changes made.

Then:

Now:

What I worry about

And find me on Twitter :)

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Building @mockvisual (YC S19) • Formerly @Flexport @Google @Intuit • Interested in platforms

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Andrew Coyle

Andrew Coyle

Building @mockvisual (YC S19) • Formerly @Flexport @Google @Intuit • Interested in platforms

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