I’ve tried to stop using the term “Great Recession” in favor of “the Panic of 2008.” One reason is that it resembles the recurring financial panics of the 19th century, but another is that it trivializes the devastation of the Great Depression (and we might face worse, too, so let’s not pre-use “great”). And we were a very different country. The Panic wasn’t as bad as the Depression partly because of policy, some wise (the Federal Reserve avoiding deflation) and questionable (the bailout of the big banks, no questions asked; a too-small stimulus). But in addition, even though many still aren’t feeling a recovery, average Americans were much better off than those who contended with the Depression.
The Census Bureau offers data and charts comparing America in 1940 and 2010. The New Deal had provided jobs and eased suffering for millions, and the economy improved substantially as the 1930s progressed (the exception, a recession in 1937 when FDR backed off on the stimulus). But it wasn’t until World War II that we completely recovered. So in 1940, with Pearl Harbor a year away, the median income for men was about $14,890 in 2010 purchasing power; for women, it was $9,220. By 2010, median income was $33,276 for men and $24,157 for women.
Much more of the population lived on farms or rural villages: Nearly 79 percent used an outside toilet and less than 18 percent had running water. Even with the strides of rural electrification from such projects as the Tennessee Valley Authority and Bonneville Power Administration, 31 percent of rural residents had electric lights. In 2010, more than 99 percent of American households had complete plumbing.
So we were a much more affluent society when the Panic of 2008 hit, thanks in no small part to the decades of wealth created after World War II, and especially into the 1970s widely shared. Our top industry in 1940 was manufacturing, with idle plants waiting to take off making war materiel and then filling the consumer boom after the war. Today, the largest employment sector is educational services, health care and social assistance. The America of 1940 was full of wide open spaces, especially in the West. The nation’s population was 132 million, vs. 309 million in 2010.
The Census page is worth lingering over. Use this inflation calculator to get a sense of what those 1940 dollars would buy today.
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Today’s Econ Haiku:
What to do with bonds
Seek a quantum of solace
Or hope gold lingers