USA Today: We’re Depressed
Kurt Brouwer September 29th, 2008
USA Today article [emphasis added] conducted a poll which found that 33% of respondents think we are in a depression. Not a mental depression, although that would certainly be justified, but an economic one.
Poll on the Economy: Americans Gloomier, for now (USA Today, September 29, 2008, Mindy Fetterman)
As people on Wall Street and Main Street hold their breath to see if a federal bailout of the nation’s financial institutions will work, Americans are starting to speak — not whisper — the word “depression.”
In a sign that anxiety is growing, 33% of 1,011 adults surveyed over the weekend by USA TODAY and Gallup said the economy already is in a depression (though by economists’ measures it is not). Just 12% said that 10 months ago.
The media has been trumpeting that this is the worst financial crisis since the Great Depression for months now, so the fact that people are talking about this is no great surprise. And, we do face some of the problems encountered in the depression, failing banks, rising unemployment, falling prices for real estate, stocks and other assets. And, our fearless or perhaps feckless leaders in Washington have been part of the problem rather than part of the solution:
USA Today continues:
Seventy-three percent said U.S. financial troubles will get worse before they get better. They expect their taxes to go up, and many worry about affording retirement or maintaining their standard of living. Nearly half worry about their homes losing value; 20% are seriously looking at taking money out of the stock market.
To me, these comments make perfect sense. Falling real estate prices have affected most homeowners, but they have triggered an enormous problem for highly-leveraged banks and brokerages that held billions in mortgages. Taxes may well go up. Home values have already fallen in many parts of the country. And, the stock market has been hurting since October of last year. All of that is true. However, in addition to the findings about the Great Depression, the poll had some fairly upbeat findings too:
But beyond the current woes, 58% of Americans see better economic times ahead — in just a year. Only 3% think the economy is growing now, but 42% expect it to be growing a year from now. While 69% say we’re in a recession or depression, only 36% think it will be that bad in a year.
With all the negative news, I’m not surprised that some folks think we are in a depression. Now, I cannot claim to have lived through the Great Depression, but my parents and grandparents did and their stories made a big impact on me. Let’s take a look at what the economy looked like back then. USA Today continues:
And in fact, the economic woes are nothing close to the Great Depression, even if it feels that way to some. We’re nowhere near the days of wandering homelessness evoked in John Steinbeck’s 1939 Pulitzer Prize-winning novel, The Grapes of Wrath.
Starting in 1929, the U.S. economy shrank for four consecutive years. In 1940, the economy still was smaller than in 1929 before the stock crash.
The economy today, though wounded, continues to expand. It grew at an annual rate of 2.8% in the second quarter.
Unemployment in the 1930s was staggering, above 20% for four years. In 1933, 24.9% of the labor force was jobless. Today, it’s 6.1%.
The Dow is down 21% from its October 2007 high. That’s less than it lost in the first two days of the rout that brought on the Great Depression.
Among poll respondents who don’t buy talk of depression is Richard Dotson, 55, of Roscommon, Mich., who works for an air conditioning company.
“We’re not in a depression,” he says. “A depression is soup lines, is people sleeping in tents. The (political) leaders are exaggerating and trying to get people’s attention.”…
We are not in a depression right now and we are not yet in a recession, although that will probably change soon. Assuming the Feds can get the credit crunch to ease up and can also figure out what to do about all the troubled home mortgage securities, the economy will begin coming out of this. However, until home prices stop falling and begin to stabilize, we can expect more turbulence ahead.
I agree with the quote above, ‘…we’re not in a depression…’ However, I do think we are all disgusted at what has happened in Washington DC and on Wall Street. The denizens of the Wall Street - Washington corridor of power have gotten us into this mess, but the worst part is that we have to watch them pontificate on what it will take to get us out of the mess. And, that is depressing.
