- The Washington Times - Tuesday, January 20, 2009


In his column “Recessions and presidents” (Commentary, Sunday), J.T. Young writes that “the Depression did not end with Hoover’s exit… By Jan. 1, 1940… America’s GDP was only $101.4 billion, still below 1929’s level.”

Mr. Young would flunk Econ 1 for using nominal gross domestic product - that is, GDP not corrected for changes in the price level… as the measure of economic performance.

Real GDP - that is, GDP expressed in constant dollars - fell by 27 percent during the Hoover administration, from 1929 to 1933. The National Bureau of Economic Research, a nonpartisan research organization, determined that the economic contraction that began in August 1929 ended in March 1933 - the month of Roosevelt’s inauguration - and that an expansion began then and continued until May 1937. By 1936, real GDP had returned to the 1929 level.

Even with the 1937-38 recession, real GDP in 1938 was higher than in 1929. By 1940, real GDP was 20 percent above the 1929 level. The current-dollar value of GDP was lower in 1940 than it had been in 1929 because of the disastrous deflation in prices that occurred during the 1929-33 contraction. The modest reflation of the New Deal years had not brought the price level back to its 1929 level.



Business Statistics of the United States

(Bernan Press)


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