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CU Economist: We're Not Close To A Depression

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Dec 2, 2008 1:20 pm US/Mountain

CU Economist: We're Not Close To A Depression

Reporting
Alan Gionet

BOULDER, Colo. (CBS4) ―

Click to enlarge 1 of 2: Crowds panic in the Wall Street district due to heavy trading on the stock market during "Black Thursday" -- Oct. 24, 1929.
AP
Click to enlarge 2 of 2: Good Question, a regular part of CBS4 News at 10 p.m., is an opportunity for Alan Gionet to drill past the basic facts of a story and give it some depth & perspective. See more Good Question reports.

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Leading economists say we are now in what's expected to be the longest recession since the Great Depression.

But could it lead to another depression?

With the housing industry tanking and jobs disappearing, some believe the poverty and mass unemployment of the 30s could be just around the corner.

Prof. Richard Wobbekind of the University of Colorado's Boulder Leeds School of Business says that in Colorado, as bad as it is right now, the numbers were uglier in the recession that hit the technology industry 6 years ago.

"It would take a really dramatic decline in output for a really long period of time to get into a depression. During the Great Depression the (gross domestic product) fell by more than 25 percent and unemployment went up over 25 percent," Wobbekind said.

"So we're talking about really dramatic changes in output and I don't think we're even close to that kind of a scenario right now."

Right now, unemployment in Colorado is at 5.7 percent. Wobbekind says it would have to go into double digits to approach depression levels.

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