by Daniel Brouse
March 10, 2025
Stock Market Recovery After the Great Depression
The Great Depression, which began with the stock market crash of October 1929, led to an unprecedented economic collapse. The Dow Jones Industrial Average (DJIA) plummeted from a peak of 381 in September 1929 to a low of 41 in July 1932—an almost 90% decline.
Recovery was slow and uneven. While there were periods of growth, the market didn’t return to its 1929 high until November 1954—about 25 years later. The recovery was influenced by various factors, including the New Deal policies, World War II spending, and the post-war economic boom. Even then, the financial scars of the Depression lasted for decades, with unemployment and social instability persisting well into the 1940s.
Why the Climate Crisis May Prevent Market Recovery
Unlike the Great Depression, which had a primarily financial cause and a subsequent recovery, the ongoing climate crisis presents an existential threat to economic stability. Climate-related disasters—hurricanes, wildfires, droughts, and floods—are increasing in frequency, intensity, and economic cost. Entire industries, from insurance to agriculture, are being destabilized.
Several factors suggest the market may never fully recover from climate-driven economic collapse:
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Infrastructure Damage – As sea levels rise and extreme weather intensifies, cities and economic hubs will suffer irreversible damage. The cost of rebuilding will outpace economic growth.
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Uninsurability of Assets – Many properties in high-risk areas are becoming uninsurable. As insurance costs skyrocket, real estate values plummet, leading to a long-term decline in wealth.
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Resource Scarcity and Inflation – Water shortages, crop failures, and supply chain disruptions will drive persistent inflation, making economic stability impossible.
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Mass Displacement – Climate refugees fleeing uninhabitable regions will place immense strain on governments and economies, leading to political instability and loss of productivity.
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Declining Investor Confidence – Unlike past recessions or depressions, which had clear recovery paths, investors may lose faith in the long-term viability of markets in a world where economic and environmental risks are unmanageable.
Unlike historical economic downturns, where recovery was a matter of policy and time, the climate crisis introduces irreversible disruptions. Without immediate action, the financial system may enter a state of permanent decline, making a full stock market recovery impossible.