9 Signs That We May Be Living Through Another Depression
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A poll released this week found that a majority of Americans are experiencing so much anxiety over the state of the economy that they're losing sleep, experiencing relationship issues and getting angry. Two-thirds of those polled by Newsweek and the Daily Beast even said they were “angry at God.” Pollster Douglas Schoen concluded that “reality is beginning to break down Americans' normally optimistic attitude.”
Another poll found that three in 10 Americans believe we're living through a depression rather than a recession.
Yet the reality that's breaking down Americans' sunny optimism is obscured by reports that the economy is in recovery, and has been since June 2009. That's a technical determination that does absolutely nothing for tens of millions of people living through the worst economic pain since the 1930s.
A little-discussed aspect of this downturn is that many Americans never fully recovered from the last one before the crash hit. In 2000, before the dot-com bust, a person right in the middle of the economic pack took home $27,833 inflation-adjusted dollars, and since then, that same person has only earned more in one year – 2006 ( Excel). By 2008, the median income was a thousand bucks less than it had been in 2000, and then in 2009 and 2010 we saw the largest two-year drop in wages and benefits since 1962-'63.
Depressions don't always unfold in the same way. The bleak period following the 1929 stock market crash has come to be known as the Great Depression, but it was not the first brutal downturn to be characterized as such. Between 1873 and 1896, the big industrial powers went through what was then called the Great Depression, and has since become known as the Long Depression.
The Long Depression never reached the grinding severity of the 1930s downturn; in fact, it was actually two severe recessions that bookended a period of rapid growth in the 1880s. Today, having “lost” much of the past decade, and with the economy looking like it may well head into a second period of recession – or at best a gradual, drawn-out road to economic health – historians may well come to view this period as another kind of Long Depression.
Consider how bleak the 2000s were relative to past decades. According to the Economist, “In the years between 1940 and 1999 the number of Americans employed outside farming grew by an average of 27 percent each decade,” but the 2000s saw the employment rate actually fall by around 1 percent.
And nobody seems quite sure what the next great engine of economic growth might be, assuming one will arrive. Consider these worrisome signs that we may be living through a new depression.
1. During periods of recovery from past recessions, we've seen rapid job growth as the economy catches up. Last month, the US economy added only 54,000 jobs, the worst in a series of anemic job reports. This graphic, prepared by the New York Times , puts the current “recovery” in perspective relative to past downturns since the 1970s. Note that it took four years of growth following the early 2000s recession to return to the employment level that preceded it.
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2. The unemployment rate today is lower than at the height of the Great Depression, but the average length of unemployment is far higher than at any time since they began to track that data – the current record beats the one previously set in the early 1980s by around 17 weeks. As I've noted before, long-term unemployment has a long-term impact on those who suffer through it – and even impacts their children's earnings.