It's the end of the recession as we know it. Why don't we feel fine?
The "Great Recession" is over -- at least officially. A recession, by definition, is two consecutive quarters of falling gross domestic product, and recent figures show that the GDP rose 3.5% in the third quarter this year. Phew.So why don't we feel better? For too many of us, it feels like nothing has changed. The sunniest estimates predict unemployment staying over 9% for the next year, and many experts fear it could rise above 10% before it drops. And underemployment accounts for a further 8%. That means 17% of Americans are either out of work or doing jobs far beneath their training level. No wonder things don't feel normal yet.
Definition vs. Reality
Part of the disconnect comes from the distance between the textbook definition of a recession and the harsh emotional reality of one. Crises make people change behavior, sometimes permanently; many Great Depression survivors made thrift a lifelong practice that they passed on to their kids. In 1959, 18 years after the Depression ended, the average personal savings rate was 8%, which rose to more than 12% by the early 1980s.
By the beginning of 2008, the personal savings rate had slumped to a dismal 0.8%, but with unemployment on the rise and the economic outlook more grim, that rate has shot up above 4%, its highest level in a decade. Even if the unemployment problem resolved itself tomorrow, it will still take years for consumer confidence to recover its robust 2007 levels.
Of course, the government can also instill economic confidence. In the Great Depression, economic catastrophe led to a raft of government initiatives that vastly changed the face of business. The Glass-Steagall Act of 1933 created the Federal Deposit Insurance Corp. -- the existence of which kept 1930s-style runs on the banks from plaguing the 2008 recession. Glass-Steagall also established strict boundaries between commercial and investment banking -- and the law's repeal in 1999 helped lay the groundwork for this recession.
Another factor that improves consumer confidence: having a steady job. One positive outgrowth of the Great Depression was a raft of programs that put people back to work. The New Deal programs -- the Public Works Administration, the Tennessee Valley Authority, even the Federal Theater Project -- offered a popular and prominent government intervention plan to about 60% of the unemployed in the Depression.
"A Good Crisis"
White House Chief of Staff Rahm Emmanuel's admonition to "Never let a good crisis go to waste" may sound mercenary, but many of President Obama's supporters hoped that the new administration would follow in the footsteps of President Franklin D. Roosevelt and quickly put people to work. Given the country's crumbling infrastructure, underfunded schools, and need for a renewed communications grid, it was clear that the rapidly rising unemployment rate provided the perfect opportunity to address a host of problems.
Unfortunately, the Obama administration's most visible initiatives have directly benefited business and industry, only tangentially assisting the average taxpayer. The president and Congress have moved to extend unemployment benefits, but this is only a short-term fix, unsatisfying to workers searching for meaningful jobs. Even the best-known initiative to directly help consumers, the CCARD Act, is taking nine months to go into effect -- and credit-card companies are keeping busy during that lag-time, raising rates and finding loopholes.
Has Anything Changed?
And therein lies the worst part of the problem. When Wall Street's profligate banks were begging for bailouts and firing employees, it felt as if the pain of the recession was hitting all parts of the socioeconomic spectrum. Tales of Dick Fuld getting punched, John Thain getting sacked, and Bernie Madoff getting imprisoned warmed many a chilled heart as unemployment loomed.
But with unemployment higher than ever, the news that the recession is "over" proves that nothing has really changed. The Wall Street honchos we blamed for dragging the country into this mess are presumably reaping the benefits of the 3.5 percent annualized growth, while millions are trying to scrape together enough spare change to pay COBRA and facing the unwelcome proposition of selling a beloved home in a soft market.
In this context, the end of the recession carries the sulfurous whiff of promises broken, opportunities lost, and benefits distributed unequally. It feels like a crisis that has very much gone to waste.
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Reader Comments (Page 1 of 11)
11-03-2009 @ 9:50AM
ij70 said...
Not to worry, it aint over.
Reply
11-03-2009 @ 2:24PM
W.G.C. said...
It is FAR FROM OVER!!!!!!!!
After 2 years unemployed It sux.....
I am 2 old 2 be living at MOMMY&DADDY'S.
PAN HANDLING HERE I COME.
11-03-2009 @ 3:56PM
James said...
No kidding...this is just more spin from Obama. Hey, I know! Let's let him dictate our healthcare too!!
11-03-2009 @ 7:06PM
Ted said...
I agree, this recession/depression is NOT over.
Today India purchased 200 tons of gold because, "India's finance minister said the reason for the purchase was that the economies of Europe and the US had "collapsed."
This quote was taken from the AOL Finance column at
http://www.bloggingstocks.com/2009/11/03/wow-why-is-gold-trading-at-record-levels/
The irresponsible printing of trillions of US dollars without any security to guarantee the value of this "new" money will result in unfettered inflation as our US dollar loses value in the world market.
The recesssion is not over and we are in for one hell of a ride if we don't get constructive leadership soon.
11-04-2009 @ 12:13AM
BS said...
Well then I guess the definition of recession is wrong!!!!!!!!
11-04-2009 @ 12:11AM
mickey said...
The unemployment rate will stay up as long as they keep adding extensions to unemployment benefits. Most people will ride out the storm until unemployment benefits run out and maybe make some money under the table without telling anyone. Most people won't get a real job until they are actually left to hang there and support themselves. I'm not rich. I am a struggling middle class soon to be lower class punching bag who has been thrown under the bus by our president and congress.
11-03-2009 @ 9:48AM
Warren Smith said...
This ain't the Hope and Change I was promised, like many of my friends, we now know we were lied to, by a very slick politican.
Reply
11-03-2009 @ 11:14AM
nikin78 said...
I don't think you know this but both McCain and Obama were gonna do the same thing when they got into office. I voted but I don't think it matters nowadays which way we vote when it comes to common people. No matter what a politician says he/she is not in it for the people, but for special interests, because at the end of the day that is their real retirement plan.
11-03-2009 @ 12:39PM
marc said...
I knew last year this is the "change" we were gonna get from the spendocrats. Obbamy had nothing to say except stupid catch phrases. It's a lot harder to change things than you think, and people don't go for radical ones. Not that Mccain was a whole lot better, that's also why Hussien got in. The conservative republicans wouldn't vote for him. They wanted people to realize what happens when you vote in someone who promises he's gonna solve all your problems with big govt. Now it will be a generation before they get a spendocrat majority again.
MARC
11-03-2009 @ 1:27PM
vaughnvdg said...
YOU AND YOUR FRIENDS were LIED TO by a SICK POLITICIAN who caused this BIG MESS with his UNREGULATED, CASINO STYLE WALLSTREET over the PAST 8 YEARS MY FRIEND. The MESS was SOOO BIG that CHANGE cannot POSSIBLY happen OVERNIGHT and will take some time!!!! OBAMA needs a BIG MOP to clean up DUMBYA'S MESS!!!
11-03-2009 @ 4:02PM
James said...
Nikin, I know what you're saying, and I agree to a degree. The difference was with McCain we wouldn't be 13 trillion in debt to the chinese now. Oh, and say what you want (it's still a free country at last check), but McCain's a hero. Obama's a lawyer.
11-03-2009 @ 6:37PM
grannykeith said...
That is the plain truth, whether anyone wants to hear it or not.
11-03-2009 @ 8:13PM
Michael Edwards said...
The economy is going to be worse before it gets better. Everyone is starting their own business and trying to stay afloat with a skeleton crew...
This is what concerns me. Most people like the Obama plan stay laid off and collect from the hard working americans.....
We the USA are becoming lazy and not living the dream we should.
Work hard and give back to the poor...
We are all becoming poor due to this administration...
Just a comment from a hard working American..
11-03-2009 @ 8:30PM
Christopher Kidwell said...
Nope, we were not 'lied to' by Obama. The fact is that he thought that he could do EVERY SINGLE THING that he said to us he was going to do.... then, when he got into office, the Repukians started playing "BRICK WALL" with him so he couldn't get anything done.
11-03-2009 @ 11:12PM
Dumperster said...
You know its going to get worse when the city has removed all the park benchs from public property - where are we even going to sleep from now on ?
11-03-2009 @ 9:50AM
jeff said...
Both parties are Crooks vote independent if you can!! The economy problems were never even dealt with.... still have derivatives which caused the meltdown ... still have Hedge funds and energy futures which cause high Gas prices go to my website and watch the PBS frontline episode WARNING SIGNS and you will vote them all out . http://www.jolietjeff.com
Reply
11-03-2009 @ 9:57AM
dave said...
I agree with all comments in this room!! Especially the one about Both Parties!! This is not a Democratic or a Republican problem, it's a Universal Problem! It takes People like us to stick together and get it done the way it should be done, it's called Unity!! Does anyone think by pulling a Lever in the Voting Booth it solves or washes away the problems of the Past? No it doesn't and that stinks because we would like to believe it would. We have a long way to Go!!
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11-03-2009 @ 12:59PM
steve said...
AMEN DAVE we need to all pay attention and vote out 90% of incumbantes and vote with your head not your party even though there isnt a differance anymore both parties are right next to each other WE NEED TO VOTE THEM ALL OUT 1 BY 1 IN 2010 AND IN 2012
11-03-2009 @ 9:58AM
DON said...
UNEMPLOYMENT WILL LAG 5 YEARS BEHIND SO SIT TIGHT THE GOV. WILL SURIVE
Reply
11-03-2009 @ 10:07AM
miles said...
What the hell is a "meaningful job" when you're desperate for money? Guess the "author" lol, means those used to making $400K and up. Well, average Americans make far less than that and the median income is now around $50K. Geez.
Reply