Dow's drop nearly as bad as Depression's first phase
Glen Kohn (center) traded stock futures in the S&P 500 pit at the Chicago Mercantile Exchange on Thursday, when the S&P 500 and Dow industrials slide to 12-year lows.
John Gress/Reuters
The US stock market has fallen so far so fast that its decline is shaping up as nearly equal to the first downward phase of the Great Depression.
Thursday's 281-point tumble pushed the Dow Jones Industrial Average down 53.3 percent from its October 2007 peak. That's almost equal to the 58.7 percent drop that the Dow suffered between September 1929 and December 1930.
Depression slumped faster
The Great Depression's first leg down was about a month and a half faster than the current slump, which has lasted one year, four months, and three days so far. By that time, the 1931 Dow had already rebounded 7.2 percent and within a month would be up 23.4 percent from its December 1930 low.
The problem with the Great Depression, of course, was that 1930 was only the beginning. The low of 157.51 for that year was followed by a nadir of 73.79 in 1931 and 41.22 in 1932 as Americans lost faith in President Hoover's ability to turn the economy around.
Today's market is a long way away from that 89 percent debacle.
Breathtaking drop
Then again, Thursday's close of 6594.44 would have seemed unimaginable to almost everyone on that heady day of Oct. 9, 2007, when the Dow hit its all-time high of 14164.53.
What will pull us out? Who will pull us out? Investors – and legislators – have so far proved unequal to the task.