Americans Expect Depression; Economists Don't

The country has a more pessimistic outlook than most of its economists.

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Last night, folded into my coach seat and praising United Airlines for not yet charging blanket rental fees, I tuned into the on-flight movie, Kit Kittredge: An American Girl. The family-friendly movie centers around a budding journalist, age 10, living in Cincinnati during the Great Depression.

I'm not sure the movie's producers anticipated their film would circle the airline cinema circuit just as Wall Street melted down. It was tough to watch—fathers leaving their families to find work, mothers sewing sack dresses and moving their kids out of foreclosed homes, soup kitchens serving up lunch to long lines of the educated but unemployed. And if a new survey is to be believed, it seems that many (most?) of my fellow passengers were watching the film and expecting to witness a similar scenario in their lifetimes.

A recent CNN/Opinion Research poll finds nearly 60 percent (60 percent!) of Americans are now anticipating a depression—25 percent unemployment rate included.

Economists, however, expect unemployment to rise another percentage point next year, to 7 percent or so, or, at worst to about 10 percent. (For reference, unemployment reached nearly 11 percent in the early 1980s. It's now at 6.1 percent.) Most economists expect recession—not depression.

So what does this mean? We should probably be seeing Kit Kittredge for what it is—a fictional Hollywood movie, set in history.

Today is different. Not only is the federal government far better organized to prevent that kind of economic catastrophe, the data don't support it. From CNNMoney.com:

The Great Depression also saw the gross domestic product, the broad measure of the nation's economic activity, plunge by 13% in 1932.

The NABE survey forecast that GDP will drop 1.1% in the fourth quarter of 2008 if the bailout does not get credit flowing again, and another 0.5% in the first quarter of next year. The economists surveyed by CNNMoney.com said they could foresee a drop of 2% to 4% in a worst-case scenario.

It's worth noting, however, that soup kitchens and food pantries are seeing increased need and decreased contributions. I suggest taking your nervous energy and putting it into your job—then putting it to work for someone else. Find out what materials or volunteer hours your local food pantry needs—now and into the holidays—and do what you can to help out.