The Star Beacon; Ashtabula, Ohio

World, nation, state

November 20, 2012

2013 looks a lot like 1937 in 4 fearsome ways

NEW YORK — Will 2013 be 1937? This is the question many analysts are posing as the stock market has dropped after the election. On Nov. 16, they noted that industrial production, a crucial figure, dropped as well.

In this case, "1937" means a market drop similar to the one after the re-election of another Democratic president, Franklin D. Roosevelt, in 1936.

The drop wasn't immediate in that case; it came in the first full year after the election. Industrial production plummeted by 34.5 percent. The Dow Jones Industrial Average dropped by half, from almost 200 in early 1937 to less than 100 at the end of March 1938.

It's hard to imagine stock indexes dropping by half today, or unemployment rising past 15 percent, as they did in the "depression within the Depression." But the parallels are visible enough to be worth tracing. They have to do with the danger of big government, and can be captured in a few categories.

— Pre-election spree that sets records. In the old days, federal spending amounted to about 19 percent or 19.5 percent of gross domestic product. That ratio was so reliable that economists took it as a given, the American normal, from which divergence was unnatural and temporary. By the old 19 percent rule, federal spending would have dropped back once the worst of the 2008 economic crisis passed.

That didn't happen. Instead the federal government continued to spend. Most important, even in 2012, when the crisis was long past, the government went on a spree, spending the equivalent of 24.3 percent of the economy, more than the 24.1 percent for the year earlier.

In 1936, a similar barrier was breached. Up until 1936, federal spending flowed at smaller levels than the spending by states and towns combined, with wartime being the exception. Roosevelt slowly ratcheted up the outlays, and in 1936, Washington spent more than the states and towns. This shift was dizzying for a country based on the principle of federalism, of strong states.

Text Only
World, nation, state
  • Lower-income teens don’t get enough sleep

    African-American high school students and boys in low- to middle-income families reported short, fragmented sleep, and that could play a role in their health risks, researchers reported Monday.
     

    April 23, 2014

  • Health agencies try to counter mumps outbreak

    Health agencies trying to stem a large and growing mumps outbreak are advising college, school and even day care leaders to make sure central Ohio students are immunized and to separate them from those who haven’t been vaccinated and those who are infected.
     

    April 23, 2014

  • An ocean of broken hearts

    Lee Byung-soo says he knew, when he saw his 15-year-old son’s body in the tent. It could not have been more horrifically obvious. But he wanted so much for him to be alive.

    April 22, 2014

  • Biden conferring with Ukranian leader over what to do
    U.S. Vice President Joe Biden arrived in Kiev on Monday for talks with Ukraine’s embattled interim leaders as Russia’s top diplomat blamed Washington for instigating the crisis that threatens to escalate into armed conflict between the two former Soviet republics.
     

    April 22, 2014

  • Panel’s role in Cleveland police ruling questioned

    A lawyer for families of men killed in separate 2012 shootings by Cleveland police — including a 137-bullet chase under federal investigation — is questioning a grand jury’s role in a recent county prosecutor’s ruling.

    April 21, 2014

  • Gender gap under Ohio governor nearly $10 an hour

    A newspaper investigation has found the average pay gap between men and women in the offices of four of Ohio’s five elected statewide officials has grown to as much as almost $10 an hour, as it’s shrunk to under a dollar across the rest of state government.

    April 21, 2014

  • OBIT Rubin Carter Box_Lind.jpg Boxer Rubin ‘Hurricane’ Carter dies at 76

    Rubin “Hurricane” Carter, the boxer whose wrongful murder conviction became an international symbol of racial injustice, died Sunday. He was 76.

    April 21, 2014 1 Photo

  • MAG-kramer25p-Janae-O-Neal.jpg Kramer the labradoodle soothes students, staff at middle school

    Once upon a time there was a dog that went to middle school.

    April 21, 2014 1 Photo

  • Ohio sees record high heroin overdose deaths

    A record number of Ohioans died from heroin-related overdoses in 2012, the state Department of Health said as it released the newest available figures for a problem that’s been called an epidemic and a public health crisis.
     

    April 19, 2014

  • Ohio’s jobless rate dips to 6.1 percent in March

    Ohio’s unemployment rate dropped in March to 6.1 percent, its lowest level in six years, according to state job figures released Friday.

    April 19, 2014

House Ads
Parade
Magazine

Click HERE to read all your Parade favorites including Hollywood Wire, Celebrity interviews and photo galleries, Food recipes and cooking tips, Games and lots more.
AP Video