October 21, 2019

Is The Great Recession Really Over?

I think it depends upon your point of reference.  Ask an unemployed man or woman if the recession is over and he or she will say no.  Ask a banker on Wall Street and he or she will say yes.  The market has come back and looks good down the road.  So where do we really stand today?

I can tell you that the restaurants are not crowded nor are the department stores.  There is plenty of gas at $3.69 per gallon or $73.80 for a 20 gallon fill-up.  Cumulatively speaking, I think we are worse off now than a few years ago.  Go into any grocery store and you will find people shopping but their carts are not overflowing.  They are buying selectively with a list in one hand and coupons in the other hand.  Many cleaners have closed their doors as cleaning is just not in some people’s budget any more.  I personally think people are scared.

The current administration would like to sell the message that everything is fine and the future looks just as rosy.  But the job picture is not good.  Depending upon who is doing the counting and the rules that they use, the unemployment picture can vary but bottom line it is slow, sluggish, and the job prospects run from bleak to non-existent.  We have over 46 million Americans on food stamps and the numbers are growing.  Unemployment benefits vary from state to state but the trend is to reduce the number of weeks as state and federal budgets are stretched to the limit.

Our children graduating from college today are loaded with debt and, in many fields, jobs are just not there.  Prospects for teachers are in the same category as brain surgeons.   Older Americans are not retiring as they face the prospect of higher medical insurance costs, a Social Security system that is shaky and no opportunity to supplement their incomes should inflation start to eat away at their fixed income. Mortgage rates are unbelievably low but we sit with millions of homes in foreclosure and millions of homes owned by people who are “underwater” on their current mortgage.  Short sales have become very common as people can’t even cover the money they owe the bank when they sell their house.

Part of the problem we face today is the shift in jobs from the United States.  In 1950, about 40% of all jobs were categorized as manufacturing.  We made just about everything internally and we had no reliance on imported oil at that time.  “Imported” was caviar and the rare individual who could afford a Jaguar, Mercedes, or Triumph and a few transistor radios made in Japan.  Today, manufacturing employment in the United States is about 9%.  In 1987, our Trade Deficit was $152 billion dollars.   In 2010, the same Trade Deficit was $635 billion dollars.  The sad thing is that if we make nothing, we have nothing to export.

Currently there are about 312,000,000 million people living in America. Of this population, we have about 140 million people who are officially employed.  We seem to have become a nation dependent upon the government.  We have about 38,500,000 million people on Social Security with an additional 16,315,000 people as surviving spouses, children, and the disabled for a total of 54,815,000 people.  Supplemental security income now covers 8,057,000 and public assistance an estimated at 3,500,000.  Unemployment benefits now cover approximately 14,000,000 Americans and we have another 7,000,000 “discouraged workers” who exist through public assistance, odd jobs, and charity programs.

Another problem we face in our current economy is the long-term unemployed.  Currently there are nearly half or 45% of the unemployed in this country that have been out of work for six months or longer.  The average period of unemployment lasts 40.5 weeks, the highest on record since 1948.  At some point, the time that you spend looking for a job itself becomes an impediment to finding work.  Your skills erode and potential employers begin to question why other employers haven’t hired you.  Returning veterans have become another part of this long-term unemployment problem.  Having served their country well, many find that they do not have the skill set that is demanded in today’s economy.

In a New York Times article in 1975, it was suggested that a recession occurred when we had two down quarters of GDP.  In June 2009, it was determined that our recession had ended.  Even though the economists say that the recession has officially ended, obviously for the millions of Americans who are still out of work, people who have seen their home values decline, people who are struggling to pay their bills day to day, the recession is very real for them.  The National Bureau of Economic Research was quick to state that it did not mean “that economic conditions since June 2009 have been favorable or that the economy has returned to operating at normal capacity.”  It meant only that the economy hit bottom and began a feeble and fragile recovery.  Nearly 7 million jobs vanished during the recession.  Until we start to recover these jobs, the recession is very real and still with us.  What Americans fear is that a new recession may occur and our fragile economy may sink even lower!

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Written by
Donald Wittmer

DONALD WITTMER is a retired business executive who held key roles in the automotive and banking sectors. For a time, he also served as a Fiscal Agency Manager for the Detroit branch of the Federal Reserve Bank of Chicago. He received his undergraduate degree from Cincinnati's Xavier University, an M.A. in business management from Central Michigan University, and earned certification in bank operations from the School of Banking at the University of Wisconsin-Madison. A husband, father, and grandfather, he teaches part-time at the Kent Place School for Girls in Summit, New Jersey.

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Written by Donald Wittmer
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