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So the recession has already lasted a full year, and most economists believe that it will go on for at least another three or four months. That would easily break the longevity record for the five previous post-World War II recessions—13 months in 1953-54.
No Confidence. During the most severe of the postwar drops, the recession of 1957-58, real gross national product—that is, total output of goods and services measured in dollars of constant value—fell 3.9%. It dropped in the third quarter of this year at an annual rate of 3.6%, and Administration economists calculate that it is now going down at a 4.5% to 5% rate. The only postwar recession record that is not yet certain to be broken is unemployment. In the first postwar recession, in 1948-49, the jobless rate peaked at 7.9%; in a total civilian labor force of 62.2 million, 4.9 million men and women were out of work. In October this year, the unemployment rate rose to 6%, and 5.5 million members of a labor force that now numbers 92 million are looking for jobs. But layoffs are increasing so rapidly that Secretary Simon predicts 7% unemployment next year, and there is a bitter outside chance that the 1948-49 record will be matched or broken by late 1975.
The current recession has also shown a greater capacity to frighten the public than any of the previous postwar downturns. The next report of the University of Michigan's respected Survey of Consumer Confidence, due this week, will show the deepest pessimism about the economy since the survey began in 1946. The business-financed Conference Board, which polls 10,000 households on the economy every two months, also finds consumer confidence at an alltime low; its "confidence index" plummeted 30% in September-October alone. The latest Gallup poll, conducted just before
President Ford departed on his Far Eastern trip, found that 72% of those surveyed saw worse economic times ahead, up from 68% in August.
Some consumers are so alarmed that they are muttering about a return of the Great Depression of the 1930s. Those fears are exaggerated to the point of unreality and betray a dimming of memories of just how nightmarish the 1930s were. Between 1929 and 1933, unemployment surged to 25% (it was still 10% on the eve of World War II), industrial production plunged by more than 53% — compared with 2% in the current recession so far — weekly wages fell 33%, and corporate profits disappeared alto gether. Not even the most pessimistic economists foresee anything remotely comparable to that catastrophe.
Still, there are good reasons to be more frightened by the current recession than by its predecessors. It has been combined with a horrifying rate of inflation — 11.5% in the third quarter — unmatched in any previous downturn or in fact in most booms. The easy optimism of the 1960s, when economists and politicians thought that they knew how to cure recessions quickly, has vanished.
In those days, it was assumed that a massive increase in Government spending and an outpouring of money by the Federal Reserve Board would soon get production and employment moving up again. Now, such a strategy would probably push prices up even faster.