The Recession is Over! Long Live the Recession!
Let me see if I’ve got this straight…
The Great Recession, or whatever we’re calling it, began in December 2007.
And we found that out when the National Bureau of Economic Research (“NBER”) announced it on November 28, 2008.
According to the NBER:
“A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.”
Wow… now that is some very euphemistic writing right there. It begins with a peak, and we all like peaks, right? And even though it ends when we reach a trough, until we reach that trough, we’re in an expansion! So… yay! If that’s what a recession is, I think I’ll have two please.
Okay, so the Great Recession ended as of June 2009.
And we were told that by the NBER on September 20, 2010.
The NBER’s president, James Poterba said that a plunge in household wealth, along with financial crises in the U.S. and overseas are what contributed to the long duration of the recession. The NBER say it lasted 18 months, which it also says is the longest slump since the Great Depression.
Now, a new study just released yesterday by Sentier Research, a firm founded by two former Census Bureau officials, shows that during the Great Recession real median household income fell by 3.2%. In American money that’s from $55,309 to $53,518.
The interesting thing about the study is that the study also shows that since the Great Recession officially ended real median household income fell by an additional 6.7%, which means it dropped from the $53,518 down to $49,909.
Wow… that kinda’ makes you long for the good old days of the Great Recession, doesn’t it?
Want to know what else you can draw from those numbers? Well, since December of 2007, real median household income dropped by 9.8%… that’s a TEN PERCENT DROP in the median household income in this country. Gordon W. Green Jr., one of the guys who wrote the report referred to the decline as: “a significant reduction in the American standard of living.”
Look people… don’t get bummed out about this study, because a few years from now the NBER is probably going to refer to today as having been a peak.
Now, there’s another study that just came out courtesy of Henry S. Farber of Princeton University. It’s titled: Job Loss in the Great Recession, and it’s a page- turner, let me tell you. Among numerous other distressing things, Farber’s study found that the folks that lost their jobs during the Great Recession and were lucky to find work again, on average earned 17.5% less than they did in their old jobs.
You see, that whole finding work thing is really getting to be kind of a long haul. According to the Bureau of Labor Statistics, on average, if you lost your job in December of 2007… you know, when the Great Recession began, it took you 16.6 weeks to find a new job. … that’s 4-5 months.
When the Great Recession ended in June of 2009, if you lost your job it took you 24.1 weeks on average to find work… about six months. But since the Great Recession ended… and we’ve been “recovering” for what, about two and a half years since then… as of September of 2011… if you lose your job, it takes an average of 40.5 weeks, or roughly 10 months to find that new lower paying one.
I don’t want to speak for everyone, but I’m not sure we can take much more of this recovering. If we recover much more, the average person who loses a job will be out of work over a year! And since 2008, we’ve got 6.5 million officially unemployed for over six months, and a few million more that we’ve stopped counting because they’re no longer even looking for work, referring to them as having “dropped out of the labor force.”
If you listen to Carmen Reinhart and Kenneth Rogoff, the academics that authored the book, “This Time is Different,” an absolutely fabulous read that came out last year, we’re not even halfway through our decade of high unemployment that follows the typical financial crisis. (By the way, these two university professors say the Great Recession began in July of 2007… sound familiar to anyone?)
Of course, Reinhart and Rogoff could be wrong. Their book only examined such crises in 66 countries over the last 800 years. And besides… maybe this time IS different. (Don’t look at me like that… and yes, I can see you.)
Yeah, this time is different all right… this time is worse.
Of course, our government economists will continue to trot out the standard list of advantages that no other country has. You know… the reasons people are always saying that you shouldn’t bet against the USA whenever we’re in a slump..
Like what, you ask?
Well, like we’ve got the the world’s best venture-capital network, for one. Okay, fair enough… I’m not going to argue that one. What else?
Number two on the list is always: “A well-established rule of law.” You know, that one never used to sound funny to me when I’d read it, but for some reason today, it made me LOL. What else you got?
Then there’s the old favorite… “A culture that celebrates risk taking.” Also very funny stuff… go on, go on…
Okay, how about: “An unmatched appeal to immigrants.” Oh boy… I just hope they weren’t watching the last Republican presidential candidate debates, because the candidates spent about a third of their time talking about the fence that most of them want to build around the entire country, if they could figure out a way to do it. And then there’s Arizona stance on immigration… not exactly a give us your tired, poor, and huddled masses kind of place, is it?
Wait, you mean that’s it? That’s the list of America’s advantages that no other country has? Uh oh. We’d better do more to talk up the venture capital thing. Come on… grab a napkin and a pen, I’m feeling a brainstorm coming on…
President Obama is just about begging for his “jobs bill” to be passed, and it goes without saying that the Republicans are… wait for it… saying NO! And normally, I might care about that sort of thing, at least have an opinion or two, but today… oh, whatever… flip a coin. Tax cuts for business aren’t going to create jobs at this point any more than the home buyer tax credits were going to rejuvenate the housing market back in… well, whenever that was.
Businesses are not going to expand or start hiring until consumers are spending again, and if you’ve been paying attention to what I’ve been pointing out thus far in this admittedly upbeat, yet pithy little article, then you have some idea when that might be… like, ummm… how does “not anytime soon” grab you?
The American auto industry, assuming its sales for the first half of this year hold up throughout the second half, which I would tell you is impossible, is on pace to sell just about 30% fewer new cars this year than it did a decade ago.
And if that statistic didn’t bother you enough, then tell me when ten years ago was, genius… 2001… you remember 2001, don’t you? That was the year that we spent in a deepening recession, reeling from the trillions in consumer wealth lost as a result of the dot-com bubble’s demise. Ahhh, 2001… an absolutely horrendous year for the economy, that is to say until things really went south after 9-11. And this year, if we’re impossibly lucky, we’ll sell 30% fewer new cars than back then?
The Federal Reserve Bank of New York, that temple of transparency… that cathedral of capitalism… well, they recently published a report on discretionary service spending, which is how much we spend after you deduct housing, food and health care. Such spending has NEVER fallen more than three percent during a recession, even going back decades… except during this “recovery” it’s already down by seven percent.
See, I’m telling you… what we need to do is get back to into a recession. It’s this recovery that’s killing us… the proof is popping up all around you like popcorn.
But what about Wall Street, I hear you cry… isn’t America still rich and strong because of our Wall Street banker-people? Aren’t they going to lead us back to the future? Actually… no. What we’ve allowed our banker-friends (and by friends I mean… well, I don’t mean friends, let’s just say that), what we’ve allowed them to do is increase income inequality significantly in this country… and we’ve allowed them to do it big time.
Well, guess what? More good news… a brand spanking new report from the International Monetary Fund, or IMF for those in the know, shows that income inequality is actually a major impediment to economic growth.
According to the IMF’s report new report:
“Beyond the risk that inequality may amplify the potential for financial crisis, it may also bring political instability, which can discourage investment. Inequality may make it harder for governments to make difficult but necessary choices in the face of shocks, such as raising taxes or cutting public spending to avoid a debt crisis. Or inequality may reflect poor people’s lack of access to financial services, which gives them fewer opportunities to invest in education and entrepreneurial activity.”
You’ll be relieved to hear that bonuses on The Street are on track to at least equal the egregious, if not unconscionable… no, how about kingly sums paid out last year… I just read it in the WSJ. So, very well done there.
And with all of this economic recovery happening all around us, what are our elected officials talking about? They’re trying to save us, aren’t they?
For Obama’s part, it seems that he’s just going to keep whining about how “the Republicans won’t pass my jobs bill.” And if that makes you throw up in your mouth a little bit, then try on the Republicans for size. It goes without saying that they’re blaming the Obama Administration, but its what they’re blaming Obama for that’ll make you want to throw yourself from the 52nd floor of the closest Bank of America building.
According to the Republicans talking points, it’s Obama’s increased regulation of financial institutions and promised future tax increases that are hurting business and consumer confidence.
Wow, is that right? It’s the increased amount of regulations we’ve heaped onto our beloved financial institutions? Did I get that right, Republicans? The “increased” amount of regulation. The “increased” amount. Increased. That’s the one that means “more,” right?
And it’s the promised future tax increases that are playing havoc with my feelings of confidence? See… I did not know that. It’s weird because, these days, when I think about the future I don’t even think I consider tax increases… I think more about being so marginalized that I won’t have to even pay taxes. Maybe that’s just me though.
Okay, it’s time to wrap this up. I know, it’s fun and all, but you know what they say about too much of a good thing. Well, that even true about “recovery.”
You want to know how bad this recovery has gotten? I mean, forget the rest of the disquieting and even down right terrifying news I’ve written about thus far… the Wall Street Journal just ran an article under the headline:
“We Can’t Ignore Housing Anymore.”
If you don’t read the WSJ you probably can’t really grasp how troubling that headline is, but trust me on this… it’s about as unsettling as finding out the New York Times has come out in support of Perry/Bachman in 2012.
The writer’s name is Neal Lipschutz and to understand how distorted these WSJ types are, check out how he kicks it off:
“In the end, we can’t dodge housing.
The U.S. recession and financial crisis of the late aughts began with housing and the scourge of subprime mortgages, which were so messily dispensed. It spread to Europe and its banks.
For a few years we tried to work around the paralyzed housing sector – the drip, drip of steadily lower home prices, the unresolved status of the wounded Fannie Mae and Freddie Mac — and it seemed to be working.”
Oh, did it Neal, you fruit loop? Is that what your obviously diminished cognitive ability is allowing you to think? You’re seeing an entire team of mental health professionals, aren’t you Neal?
Then Neal says:
“Now that worries mount about an ever more likely return to recession amid a significant equities markets decline, we are hearing again about housing.”
Hearing “again” about housing? I wouldn’t worry too much about you hearing anything, Neal. I just don’t think you’ve heard anything in maybe twenty years. I think you should consider donating your head to the particle physicists at CERN’s laboratories as they’re studying the beginnings of the universe and are apparently trying to find the densest matter on earth.
And Neal goes on…
“There’s the foreclosure mess, the underwater mortgage mess, the tight mortgage lending standards and all the rest. There’s displaced construction workers. There’s consumers unwilling to spend as their perceived real estate wealth evaporates.
There’s housing, traditionally the leader out of recession, still generally in decline, and harder to ignore.”
It’s only my perceived wealth that’s been evaporating, Neal? Well, that certainly is a relief. As long as it was only my perceived wealth. Hey, here’s an idea, since it’s only perceived wealth, how about you write an article in favor of the bankers granting everyone reductions in perceived principle? You’d be in favor of that right… as long as it’s only perceived and all.
Tell you what I’m thinking right now. I’m wondering if you’d perceive my size 12 boot going up your hard to ignore ass.
Ready for what Neal thinks we should consider… you know, in order to fix the housing thing he’s having a hard time ignoring…
“… more people who are current on their mortgage payments have to be able to refinance their mortgages to take advantage of rates near 4%.
That savings for many would go into additional spending, a stimulative measure, and would boost their economic psychology, which is important. Even if they used the savings to pay down their own debt it would do long-term good.”
Okay, well first of all, what kind of a word is “stimulative,” Neal? Let me guess… were you a triple-digit SAT score kind of guy? You know, math and verbal combined, what… about 770? And then straight to the local community college to get your Associates in North American Egotistical Studies or possibly Recumbent Illiteracy?
And just whom did you have to blow to get a job at the WSJ? Wait a minute… I know… maybe I should be calling you Kneel.
Okay, I’m done. There’s no point in going on about Kneel anyway. If I’m not going to get to kick his callous, insensitive and entirely ignorant behind around a parking lot, then what’s the point? I guess I could challenge him to a ballet of wits, but that wouldn’t be right either because he’s unarmed.
People, in case you haven’t picked up on it yet, even though you’ve read me saying it about a thousand times over the last three years, our economy is in a deflationary spiral that as it stands today, will end in a deflationary collapse. Housing prices are in a free fall… incomes are decreasing… people have stopped spending… companies will lower prices which will lead to lower profits… unemployment will rise… foreclosures will increase… and so on, and so on…
In Neal’s column is the answer to why we’re not solving the problem by the way. I’m serious. He pointed out that according to Dow Jones, in Ben Bernanke’s recent testimony to congress, the Fed Chief asked the legislators to develop a “future path” for housing,
And about that, Neal said the following:
“Given political realities, it’s hard to imagine much of a fiscal push, in housing or elsewhere.”
Neal may be in idiot, but he’s no dummy… well, maybe he is, but not really. He’s right. We’re not solving the foreclosure crisis because at least half the country doesn’t even understand that it is a crisis. They only think that people irresponsibly bought homes they couldn’t afford. And no one is in favor of bailing out the bad decisions of irresponsible sub-prime borrowers. And as we fiddle… Rome burns.
Think about the numbers you’ve just finished reading. Incomes dropping, foreclosures rising, unemployment lasting longer and longer… and no possibility for change in next two tears… see the trend lines dropping… now imagine you’re in Boston last night and at about 1:30 AM, the police line up in riot gear. You’re told you have two minutes to evacuate the park in which you’re protesting. Before you know it the police are on everyone. You’re thrown on the ground and handcuffed, put into the back of a van. You’re not allowed to protest what’s happening and if you do, we’ll take you down…
Now close your eyes, and imagine all of the numbers being two years worse… and the organizers are planning to take to the streets. Only it’s two years from today and now they’re expecting a crowd of at least 35,000. The police continue to use force to suppress the people.
What do you see? What do the video clips of Occupy Boston or Occupy Wall Street look like then… two years from now, when everything is that much worse?