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Terry Fitzgerald, senior economist and assistant vice president at the Federal Reserve Bank in Minneapolis, spoke to members of the Hudson Area Chamber of Commerce & Tourism Bureau. The program was arranged by John Malmberg at Hudson's First American Bank. Photo by Doug Stohlberg

Recession 'not even close' to depression

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Terry Fitzgerald, a senior economist and assistant vice president at the Federal Reserve Bank in Minneapolis, said the recession is serious but not nearly as bad as reported in the popular media. He made his comments Tuesday morning at the "Good Morning Hudson" meeting of the Hudson Area Chamber of Commerce & Tourism Bureau.

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"We have to put things in perspective," Fitzgerald said. "Some compare this recession to the Great Depression. It's not even close."

Fitzgerald said there have been 11 recessions since World War II. The current is probably among the worst, but still nothing more than a normal adjustment.

Output is down 3.7 percent, but during the Great Depression it was down 26-plus percent. Employment is down about 4 percent, but during the Depression it was down 18 percent.

"The misconception is that people think a healthy economy is calm - it's never as calm as it looks - even a healthy economy is not smooth." Fitzgerald said there are some signs pointing to an end of the current downturn, but cautioned that government policy, like bailouts of failing companies, can have a negative impact on a recovery.

"Recession, plus adding on bad government policy, can lead to depression."

For more of this story, see page 7A of the August 6 print edition of the Star-Observer.

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