During the Great Depression of 1939, the economic downturn for GDP was down to 30 percent. The industrial sectors faced a decline of 47 percent which severely affected the job sector. About 23 percent were jobless, hereby not only the USA but other countries faced a similar downfall.
Maybe rich and developed countries or the poor countries to developing countries had seen the depressions in all sectors.
According to the experts or the monetarist, the main reason for this condition was the reduction in the flow of money. But the situation of financial decline led to the loss of jobs. Effects on the Economy were seen immediately during the pandemic conditions of 2020. Industrial sectors, businesses were entirely affected when the world was under lockdown. Sudden effects were on the GDP that had a depression of 3.5 percent.
Great Contraction decline over bankruptcy
The 33 percent of decline or deflation was because of the bank crisis when there was no money flow. It was the time when there was bankruptcy, for which banks were shut. A great downfall in the share market was seen when the bank shareholder wealth was reduced. Though the initial fall was from the stock market crash according to Friedman and Schwartz.
It was the period where there was no flow of money in the market. This stopped the functions in different sectors including the banks and stock market leading to economic downturn.
But during the pandemic of 2020, there was a slow but continuous flow of money. The banks faced hardships but were not bankrupt. But by 2021 the continuation of lockdowns or slowdown of the pace to work, businesses and industries may suffer from worsen qualities. Though comparatively, the situation is competitively better than the Great Depression. As the conditions are different as there is a consistency in the flow of money.
Does Post Covid 19 Economic downturn imply same as 1939?
The Great depression started from the beginning of 1931, by 1932 there was a decline of GDP to 25 percent. By the end of the period, it increased to 30 percent approximately. The two years were a massive disaster to not only the USA but the entire world.
The post covid 19 financial crisis has been less effective though it is true that the sudden onset of the pandemic forced a job crisis.
Different categories of private or blue-collar or contract workers had faced massive financial issues. The business-related to resorts, restaurants, and hotels had suffered a complete loss. On return from the lockdown, poverty had severely affected lives. About a decade from the Great Depression, in 1918 the Spanish Flu, 1919 the World War II was causing continuous damage to the economy. World War II had implemented an intense effect on the deflation of the currency.
While looking forward, considering History repeats inflation is expected with loss in economic condition, Worldwide. It is one of the major economic downfalls of the 21st century compared to the Great depression in World financial history.