I thought it would be interesting to run a simple test for Canada — take some key economic indicators, and see how far we’ve slipped. Here’s what I’ve tracked down so far:
| Indicator | Date | Value | Last seen (before October 2008) |
|---|---|---|---|
| GDP | Q4 2008 | CAD 399.6 B | Q4 2007 |
| Current account surplus | Q4 2008 | CAD 150.0 B | Q4 2007 |
| Unemployment rate | January 2009 | 7.2% | November 2004 |
| Canadian dollar | March 11, 2009 | USD 0.77 | September 2004 |
Basically, we’ve slipped back to between 2004 and 2007, depending on which indicator you look at (a little further, probably, if I included stock market indices). That’s not great (and our population is a bit larger), but ask yourself this: how did you feel in 2004? Were you as worried as you are now? Did it feel like a depression then?
I know things aren’t great — especially for people who’ve been laid off and/or lost their retirement savings or homes — but I think the (mainly left-wing) pundits (journalists, bloggers, and politicians) who keep screaming words like “depression” are just exploiting fear to try to get more attention for themselves, just like the (mainly right-wing) pundits did with anti-terrorism fears after 2001-09-11.
It’s a vicious circle, because they have to keep upping the ante to stand out from the others, until we’re all convinced we’ll be standing in soup lines tomorrow (assuming anyone can afford to supply us with soup).
Quoderat 
This is a good point, but it’s not the values of the indicators themselves that worry me but the trends: rates of change, volatility, and direction.
stand: that’s a good point, and there’s no way to tell when they’ve bottomed out. Personally, I’m a random-walk type, so I believe that the markets and the economy are *always* 100% unpredictable: things are just as likely to crash tomorrow whether we’re in a recession or a boom.
That said, I think the fearmongering actually does help force the indicators lower, so those people deserve some of the blame for the situation they’re self-righteously complaining about.
Interesting, David. So granting your point about fear-mongering (and I do agree with it) how should a responsible person behave if s/he genuinely believes things are bad and wants to warn others? Or is it just a matter of not being self-righteous about it?
I might adopt a fear-mongering strategy presuming that it would be more effective at getting the word out. Perhaps I’ve decided that the risk of making things worse is outweighed by the possibility of getting more people to take the situation seriously. Markets may or may not be 100% unpredictable (not sure myself), but there is no question that they are affected by behavior. Economic indicators are ultimately just a *measure of* behavior.
I might freak out a lot of people with my fear-mongering, but if I can get a larger number of people to settle down it might be a net win.
stand: thanks for the second comment, because it gives me a chance to make up for any overstatement in my posting.
I have no problem with people talking about how things actually are — we’re in a tough recession, and people are losing jobs, retirement savings, etc. I’m complaining only about the people who deliberately exaggerate it just to get attention or score political points, and talk about things that the numbers don’t seem to support, like another depression, or the complete collapse of the West, etc.