It seems as though everyone these days is talking about the possibility of our economy not just going into a recession, but going into a depression. In fact, a recent nationwide study reported that 60% of all Americans believe that our economy is heading into a depression. For some this conjures up memories of hard economic times with long lines at soup kitchens and labor camps sprouting up wherever work can be found. It is a downright scary image. Fortunately, the facts do not support the argument that we are nearing a depression. For example:

During the Great Depression 50% of all homes were foreclosed on. While it might feel like we are approaching these levels now the reality is that less than 4% of all homes in the US have been foreclosed in this year. According to the Wall Street Journal approximately 16% of all homes are currently worth less than the amount that is owed. This is something to be concerned about but still far less then depression levels.

During the Great Depression the unemployment rate ballooned to 25%. At last report the unemployment rate in the US was 6.1% which is close to the historically average. Even the most pessimistic economist predict that the unemployment rate may get as high as 8 or 9%, no where near the levels of the Depression.

During the Great Depression the size of the US economy shrank by 33%. During the first 6 months of this year the US economy has grown at an average rate of 2.1%. Some economists have predicted that the US economy will shrink in future months due to the current credit problems, however, the predictions are that the economy will shrink by a relatively tame 2-3%.

In the 15 months following the 1929 stock market decline, which is often considered to be the beginning of the Great Depression, 1,300 banks failed. In the last 15 months a total of 14 banks have failed in the US.

The economy is clearly on the edge of a recession. Most economists predict that the US economy will slip into a shallow recession over the next several months and will recover some time in mid 2009. While this is a reason to be concerned for many people who are struggling to pay their bills and worried about keeping their jobs, it is not an indication of an impending depression.

Submitted by Chase Armer. Chase is a partner at Planned Solutions, Inc. in Rancho Cordova.