Year Unemployment rate 1923-1929 3.3 1930 8.9 1931 15.9 1932 23.6 1933 24.9 1934 21.7 1935 20.1 1936 17.0 1937 14.3 1938 19.0 1939 17.2 1940 14.6 1941 9.9 1942 4.7

I recent months, we have constantly been told that this is the worst economy since the Great Depression. The Dean of the University of Texas business school said so in March. President Obama said so in September during his presidential campaign and continues to say so today. If you look at a few key indicators, one may question that assessment. Professor Lee McPeters takes exception to the notion.

But, when one looks at the unemployment rate numbers from the years just after the 1929 crash, we find that they rise to an average rate of 8.9 in 1930 and top out at 24.9 in 1933. (as per the BLS) It stays above 20% through 1935 and then remains in the mid to upper teens until World War II. Our most recent unemployment rate was pegged at 9.5% which is far less than the era of the Great Depression. However, when one looks at more recent historical numbers, we find that the current unemployment rate reflects more accurately with the early 1980’s. In 1982, the avg rate for the year was 9.7% and in 1983, 9.6% of labor was unemployed. For the 8 years of President Clinton’s administration, the unemployment rate was 5.2%. During the GW Bush administration, the average unemployment rate was 5.3%,

Beginning Date Ending Date Dow Industrials Loss

————– ————- —————— —-

Sep. 3, 1929 Jul. 8, 1932 381.17 to 41.22 -89%

Mar. 10, 1937 Mar. 31, 1938 194.40 to 98.95 -49%

Nov. 12, 1938 Apr. 8, 1939 158.41 to 121.44 -23%

Sep. 12, 1939 Apr. 28, 1942 155.92 to 92.92 -40%

Jan. 11, 1973 Dec. 6, 1974 1051.70 to 577.60 -45%

Sep. 21, 1976 Feb. 28, 1978 1014.79 to 742.12 -27%

Apr. 27, 1981 Aug. 12, 1982 1024.05 to 776.92 -24%

Aug. 25, 1987 Oct. 19, 1987 2722.42 to 1738.74 -36%

Jul. 16, 1990 Oct. 11, 1990 2999.75 to 2365.10 -21%

If we take a brief look at the stock market crash of 1929, we find that the market’s initial jolt was a loss of 89% from late 1929 to mid 1932. For the current environment to be on par with that time frame, if we consider a market high in 2007 of a 14164 Dow Jones, then the Dow would have to fall to 1558 to equal the malaise. Midday on July 15, 2009 the Dow stood around 8500.

The most recent bear market had a low of 6547 which means the drop from the 14164 high was about 54%. Now, the Dow had a rebound after the 1929-1932 bear market ended and it rose to at least 194 by 1937, from which time the Dow took another 49% tumble. The rebound is often referred to as a “false peak” because the apparent recovery in the economy as indicated by the Dow rising 373% from the 1932 low to the 1937 high. Our current rise from the 6547 low is about 30%. Earlier in the year, the rebound was more like 40%. So, the question will be, is our current rise just another “false peak” or is there a real recovery.

GDP percent change based on current dollars GDP percent change based on chained 2000 dollars 1930 -12.0 -8.6 1931 -16.1 -6.4 1932 -23.2 -13.0 1933 -4.0 -1.3 1934 17.0 10.8 1935 11.1 8.9 1936 14.3 13.0 1937 9.7 5.1 1938 -6.2 -3.4 1939 7.0 8.1 1940 10.0 8.8 1941 25.0 17.1 1942 27.7 18.5 1943 22.7 16.4 1980 8.8 -0.2 1981 12.2 2.5 1982 4.0 -1.9 1983 8.7 4.5 2004 6.6 3.6 2005 6.3 2.9 2006 6.1 2.8 2007 4.8 2.0 2008 3.3 1.1

The 2008 GDP numbers are a bit misleading because the last two quarters showed contraction with a substantial 4th quarter contraction of the GDP over 6% with the first quarter of 2009 contracting by 5.5%, based on 2000 dollars. The contraction of the economy as a percentage of GDP is definitely more pronounced than in the late 1970’s and early 1980’s if you only look at the last two quarters and compare it to the annual GDP. But, you can’t do that. It’s comparing a full year to a couple of quarters. For instance, the second quarter of 1980 saw a GDP fall of 7.8%, which is greater than any of the past 3 quarters. It was bad timing for President Carter because he was trying to get re-elected. Bad timing because the total change in GDP for that year was just 2 tens of one percent. So, the story is still being written as to how well this recession compares to the early 1980’s. But, the GDP change for the entire year of 1930 was negative 8.6% followed by -6.4% in 1931 and then a huge contraction of 13% in 1932. We’ve had two quarters with a 6% and 5.5% decline.

All of this points to a recession comparable to the late 1970’s and early 1980’s. The comparison to the Great Depression is simply a tough argument to make, at this point. I truly hope, as I think everyone does, that politicians will not be able to accurately say that we are in the worst condition since the Great Depression. Many people have blamed the depression on Herbert Hoover. Others blamed the deep recession of the late 70’s and early 80’s on Jimmy Carter. Could this be the reason why the media and politicians choose Republican President Hoover’s legacy instead of Democrat President Jimmy Carter’s? Or is it more because from a PR standpoint, the Great Depression is something that every one knows about. Maybe its more attention getting or sexy to talk about the Great Depression instead of a simple recession. But, regardless of the reasoning, many aspects of the current situation cannot credibly be compared with the depression and more accurate reporting by the media and proclamations by policians would be that it is the worst in 30 years.

Weather Bottom Line:

Today we have a classic situation with a storm coming out of the plains, dragging up warm front. Clouds and showers with a few t’storms are in the cards but all of the clouds and such should suppress any big storms. But, the warm front will draw up warm, moist, unstable air behind it so that will set the stage for Thursday as the cold front approaches. It’s a pretty strong cold front with highs behind it for Friday and the weekend in the upper 70’s and low 80’s. I would think that we would have a reasonably good chance for t’storms and possibly strong storms on Wednesday afternoon or evening.

DAY 2 CONVECTIVE OUTLOOK

NWS STORM PREDICTION CENTER NORMAN OK

1252 AM CDT WED JUL 15 2009



VALID 161200Z – 171200Z



…THERE IS A SLGT RISK OF SVR TSTMS FROM PORTIONS OF THE

CENTRAL/SRN PLAINS EWD INTO THE TN/LOWER OH VALLEYS…AND THEN NEWD

INTO NY/PA…



…SYNOPSIS…

UPPER TROUGH OVER THE WRN GREAT LAKES WILL DEEPEN SEWD THU FROM THE

MID MS/TN VALLEYS EWD INTO THE CAROLINAS…AS THE UPPER RIDGE BUILDS

NWD ACROSS THE INTERMOUNTAIN WEST. THE GRADIENT BETWEEN THESE

SYSTEMS WILL RESULT IN STRONG FLOW ALOFT…40-55 KT AT 500 MB…WITH

NWLY WINDS FROM THE NRN ROCKIES SEWD INTO KS/OK…AND WLY/SWLY WINDS

FROM THE MID MS/TN VALLEYS NEWD THROUGH THE OH VALLEY AND INTO THE

NORTHEASTERN STATES. COLD FRONT ASSOCIATED WITH THE UPPER TROUGH IS

FORECAST BY LATE THU AFTERNOON TO EXTEND FROM NY SWWD TO NEAR THE

AR/MO BORDER…AND THEN WWD TO THE CO/NM BORDER.



…KS/OK/NEB SEWD INTO SRN MO/AR…

CLUSTERS OF STORMS MAY BE ONGOING AT THE START OF THE PERIOD ACROSS

THE OZARKS AND WRN CENTRAL PLAINS DUE TO LIFTING ASSOCIATED WITH

SEPARATE LOW LEVEL JETS. WHILE THESE STORMS ARE EXPECTED TO BE

ELEVATED…STEEP MID LEVEL LAPSE RATES MAY SUPPORT A HAIL

THREAT…ESPECIALLY WITH THE CENTRAL PLAINS STORMS. HOWEVER…BOTH

CLUSTERS OF STORMS ARE LIKELY TO INTENSIFY AND BECOME SURFACE BASED

LATER IN THE DAY AS THEY SHIFT SEWD AND ENCOUNTER A

WARMING/DESTABILIZING AIR MASS. OTHER STORMS SHOULD ALSO DEVELOP

NEAR THE FRONTAL BOUNDARY BY LATE AFTERNOON AS STRONG HEATING

WEAKENS CAPPING INVERSION. ONCE SURFACE BASED STORMS DEVELOP…THE

COMBINATION OF MODERATELY STRONG INSTABILITY AND EFFECTIVE SHEAR AT

30-40 KT WILL BE FAVORABLE FOR SEVERE STORMS. GIVEN THE STRONGLY

VEERING WIND PROFILES AND NWLY FLOW ALOFT…THE DEVELOPMENT OF MCS/S

WITH COLD POOLS APPEAR MOST LIKELY…WITH WIND DAMAGE THE GREATER

THREAT…ESPECIALLY DURING THE AFTERNOON/EVENING HOURS.



…LOWER OH/TN VALLEYS NEWD INTO NY/PA…

AS UPPER TROUGH AMPLIFIES…HEIGHTS WILL GRADUALLY LOWER AND

TEMPERATURES COOL ALOFT ACROSS THE REGION. ONCE TEMPERATURES WARM

INTO THE 80S…MODERATE INSTABILITY WILL DEVELOP WITHIN MOIST AIR

MASS LOCATED AHEAD OF THE COLD FRONT. ALTHOUGH WINDS ABOVE THE

BOUNDARY LAYER WILL BE MOSTLY WLY/WSWLY…SPEED SHEAR WILL PROVIDE

SUFFICIENT DEEP LAYER SHEAR TO SUPPORT ORGANIZED STORMS. EVEN

THOUGH MODELS VARY ON THE COVERAGE OF STORMS…THE AMOUNT OF

INSTABILITY AND COOLER TEMPERATURES ALOFT SHOULD SUPPORT SOME SEVERE

HAIL. HOWEVER…THE DEEP UNIDIRECTIONAL WIND PROFILES APPEAR MOST

FAVORABLE FOR LINE SEGMENTS AND WIND DAMAGE. SINCE STORMS WILL BE

DIURNALLY DRIVEN…THEY SHOULD DIMINISH QUICKLY AFTER SUNSET.



..IMY.. 07/15/2009