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Corn+Soybean Digest

“Doc, How Bad Is This Downturn?”

This question has been asked repeatedly on the seminar circuit, at the feed store and during planning meetings in recent months. Let’s put this recession, while not official yet, into context with historical standards.

Recently unemployment increased to 6.5%, with the possibility of the indicator reaching 9-12%. During the Great Depression, unemployment peaked at 25% and spent nearly a decade above 15%. The deep recession in the mid-1970s and early 1980s resulted in an unemployment rate between 7.%5 and 9.5%.

Stock Market
The Dow Jones peaked at 381 in September 1929, declined by 47% in two months and had a series of short rallies, but declined 89% to 41 by July 1932. Subsequent declines in 1973-1974 and 1981-1982 were decreases of 45% and 24%, respectively. Recently in the year 2000, the NASDAQ lost 78% and the Dow declined by 38%. The latest carnage finds a 42% decline from the peak, or nearly $6.2 trillion in loss of wealth excluding home values.

A typical recession, regardless of unemployment and stock market decline, is approximately 11 months, compared to the typical business expansion of 58 months. The question concerning the recent state of events is whether this is a U.S. or global recession. The answer may be both, which could result in an extended downturn lasting 12-24 months, but hopefully not like the Great Depression that extended from 1929 to 1939.

P.S. Recent contacts in the field indicate land auctions are receiving discounted bids or no bids in certain sections of the country.

Editor’s note: Dave Kohl, Corn & Soybean Digest trends editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups. He can be reached at

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