Scary Reality. Great Depression II Is Here

Last week was a pretty good one for President Obama. Bill Clinton helped out big time when he returned from North Korea with the American journalists Laura Ling and Euna Lee. Sonia Sotomayor was elevated to the Supreme Court. And Friday’s unemployment report registered a tiny downward tick in the jobless rate.

But for American workers peering anxiously through their family portholes, the economic ship is still sinking. You can put whatever kind of gloss you want on last week’s jobs numbers, but the truth is that while they may have been a bit better than most economists were expecting, they were still bad, bad, bad.

Some 247,000 jobs were lost in July, a number that under ordinary circumstances would send a shudder through the country. It was the smallest monthly loss of jobs since last summer. And for that reason, it was seen as a hopeful sign. The official monthly unemployment rate ticked down from 9.5 percent to 9.4 percent.

But behind the official numbers is a scary story that illustrates the single biggest challenge facing the United States today. The American economy does not seem able to provide enough jobs — and nowhere near enough good jobs — to maintain the standard of living that most Americans have come to expect.

The country has lost a crippling 6.7 million jobs since the Great Recession began in December 2007. No one is predicting a recovery in the foreseeable future powerful enough to replace the millions of jobs that have vanished in this historic downturn.

Analysts at the Economic Policy Institute noted that the economy has fewer jobs now than it had in 2000, “even though the labor force has grown by around 12 million workers since then.”

Two issues that absolutely undermine any rosy assessment of last week’s employment report are the swelling ranks of the long-term unemployed and the crushing levels of joblessness among young Americans. More than five million workers — about a third of the unemployed — have been jobless for more than six months. That’s the highest number recorded since accurate records have been kept.

For those concerned with the economic viability of the American family going forward, the plight of young workers, especially young men, is particularly frightening. The percentage of young American men who are actually working is the lowest it has been in the 61 years of record-keeping, according to the Center for Labor Market Studies at Northeastern University in Boston.

Only 65 of every 100 men aged 20 through 24 years old were working on any given day in the first six months of this year. In the age group 25 through 34 years old, traditionally a prime age range for getting married and starting a family, just 81 of 100 men were employed.

For male teenagers, the numbers were disastrous: only 28 of every 100 males were employed in the 16- through 19-year-old age group. For minority teenagers, forget about it. The numbers are beyond scary; they’re catastrophic.

This should be the biggest story in the United States. When joblessness reaches these kinds of extremes, it doesn’t just damage individual families; it corrodes entire communities, fosters a sense of hopelessness and leads to disorder.

The unemployment that has wrought such devastation in black communities for decades is now being experienced by a much wider swath of the population. We’ve been in deep denial about this. Way back in March 2007, when the official unemployment rate was a wildly deceptive 4.5 percent and the Bush crowd was crowing about the alleged strength of the economy, I wrote:

“People can howl all they want about how well the economy is doing. The simple truth is that millions of ordinary American workers are in an employment bind. Steady jobs with good benefits are going the way of Ozzie and Harriet. Young workers, especially, are hurting, which diminishes the prospects for the American family. And blacks, particularly black males, are in a deep danger zone.”

The official jobless rate is now more than twice as high — 9.4 percent — and even more wildly deceptive. It ticked down by 0.1 percent last month not because more people found jobs, but because 450,000 people withdrew from the labor market. They stopped looking, so they weren’t counted as unemployed.

A truer picture of the employment crisis emerges when you combine the number of people who are officially counted as jobless with those who are working part time because they can’t find full-time work and those in the so-called labor market reserve — people who are not actively looking for work (because they have become discouraged, for example) but would take a job if one became available.

The tally from those three categories is a mind-boggling 30 million Americans — 19 percent of the overall work force.

This is, by far, the nation’s biggest problem and should be its No. 1 priority

http://www.nytimes.com/2009/08/11/opinion/11herbert.html?_r=3&hp

 

i couldn't agree more. I have been having this exact same conversation over and over with friends of mine that are in general labor/construction trades.

We have noticed amoung ourselves that our fathers and our fathers, fathers could at one time work and manage to raise a family, own a house and car and still have enough left over for the occasional vacation from the mans job.

Just from observation (cant back it with technical facts) it seems our generation (40 ish year olds) have become the first that can no longer do these things. My friend a union member and in general construction, another that works for a local small factory made it clear that neither of them could even come close to those goals. One can not even afford to make vehicle payments and is forced to commute to work. Its stated they can barely afford to financially take care of themselves.

It frustrates them both to no end as both are bright men that simply prefer and enjoy physical labor over academia. Hardly a fault. I get the feeling its especially frustrating for both because they both make it clear theres no where to turn for help and there are no jobs to look to that could better their situation. I think this is devastating for grown men especially in a country as wealthy as ours....

We hear all these financial numbers spun on tv news and in economic reports but none of it means a damn thing because at the end of the day not only are there more jobless americans...our standard of living continues to erode and i am scared the next generation of young men will suffer a worse fate.

i dont tend to be a doomsday personality but when i hear how poor our general education system is (i live in los angeles, its pretty bad) and how poorly we attend to the future needs of the younger generation, i have really dire feelings about the next 10 or twenty years. I just dont see anyone in any office that has a chance to make change happen, watching out or focused on the longer term picture (20+ years from now) and trying to implement a comprehensive strategy of any kind. i honestly dont think there is anyone that has even envisioned and mapped out in detail a strategy for our future.

i read an interesting article recently that brought up an interesting point that maybe this is a time of transition when america reinvents itself and begins a new future phase of growth as we embrace and build the foundation as a leader in technology jobs. i hope so. A country full of pissed off, unemployed and desperate grown men will not be an enjoyable place to live.

 

It stems from the high spending in washington which is resulting in a weak dollar policy at the fed, creating massive inflation. Under Bush, it was the war machine that doubled the national debt from 5 trillion to 10 trillion, now under Obama, it's a liberal spending spree on all the democrats' pent up pet projects that will double the national debt from 10 trillion to 20 trillion. With already 2 trillion blown in the first 6 months of the new president.

Don't expect things to get better for your standard of living any time soon.

 

I feel I'm underemployed for a 25 year old from a top 50 institution, but I just tell myself, be grateful to have a job, or two or three, when there are many out there in my age group without any income whatsoever.

I do not believe this is anything like the great depression. The great depression was characterized by an absolute shut off of credit, and when american's still have access to an average of 14k in credit cards per family, I don't believe it's that bad out there. The collateralization of debt that most blame for the recession is misplaced. Collateralized debt obligations are the reason mortgages and credit cards are affordable. It's not that CDO's are bad, but that when you leverage yourself to more notional amounts than there is money in the world, you can't really expect to have good outcomes when they go against you. I find that the SEC as well as the Federal Reserve will be able to rein in the excess leverage that has absolutely decimated the financial industry. The golden rule is he who has the money makes the rules. In this situation, banks are still holding most assets through highly leveraged CDO's. By the Fed removing these obligations piecemeal, they have transferred the risk across a greater swath of the economy.

This will help us in our recovery, and the rally isn't really a rally but a realization that the panic selling in March was dramatically overdone. The old adage isn't it went up too fast, but that it went down too fast, and that's where we're at today.

 

The problem is people do not have the ability to continue using credit in lieu of wage increases. People no longer have home equity they can tap to "pay off" credit card balances. They have to pay them using their income. If their income wasn't adequate enough to live without debt before, how are they going to pay off any additional debt? Sure, they have access to credit but using credit without paying it back is theft.

Of course it was financial ignorance to refinance the home in order to pay credit card debts but people were doing it.

I am debt free including my home. I have one credit card for emergency use. I have access to the credit but realize it will have to be paid back out of future earnings. I think most people are starting to realize that.

 

My father was a union carpenter (in the 1960s/70s), my mother a housewife, they raised 4 children. He had a truck, my mother a car. As time went on my mother started to work part time and we (the children) could see the gradual decline in household wealth.

My brother-in-law is a union carpenter in the Denver area and between projects he has resorted to working overseas for higher wages, unlimited overtime and putting more away for his retirement.

 

First, it bothers me that people refer to what we now see as the Great Depression II.

Walker Evans photographed the Great Depression and I see the poorest people in my community every day.

They are not STARVING, they do not have SUNKEN FACES and their eyes are not particularly sad. The MISERY among the poorest during the Great Depression was devastating.


The poor people that I see every day tend to more than well fed, and well tattooed. Drive by the cable office on any day and you will see the poorest people in town paying their cable bill in cash, because the poor do not have checking accounts to pay by mail.

If we see another Depression the middle class will be hit the hardest, unlike the last one which involved the misery and physical hardships suffered by the poor.


I do see FEAR in the working middle class. They FOOLISHLY trusted whichever one of the two major political parties they associated themselves with their vote, to maintain an American way of life in which those who worked hard and played by the rules were fairly rewarded with the opportunities to make a better living than their parents.

THINK AGAIN.

Those who put their trust in political leaders to run the country and for business leaders to run companies well enough to maintain a private sector job base, have been betrayed.

I have led my life CYNICALLY.

I never TRUSTED an elitist whether it be a political or economic one.

I am just an idiot doing pretty well trading the market each day, with no guarantees that I will ever make another buck trading.

The only security that I have is it whatever personal wealth that I have been able to accumulate.

I have a pension. But I ain't exactly betting on the pension fund from which is comes to stay solvent. With the treacherous crowd that populates both of these corrupt political parties spending money created out of thin air.

The next Great Depression will not be marked by physical starvation, it will be marked by the hopeless resignation that this nation's best days are clearly behind it.

 

I liked John McCain's plan for good college tuition plans, good health care plans.. it was "a good job".. I think he had a better chance of delivering on anything than BO Pelosi and Company ever will....

The markets are rallying while companies are shedding workers. That is smart money causing that rally btw.. that means that they are improving productivity and doing tech things to replace those workers, maybe outsourcing to third world places, whatever.. there is the likelihood that we will have the most massive jobless recovery to date.. which means that tax revenues will not recover, and that in the face of massive public sector spending.. LOL..

I am not "feeling your pain" everybody, I'll make do with my own, thank you very much...

 

I agree that the real unemplyoment numbers are probably much higher than what the government's b.s. reports say.

However, I still don't know one single person that is unemployed now or lost their job at some point in the last year. I think the rust belt is hurting, but the rest of the country isn't doing that bad.

 

Think about all that has transpired over the last 2 years or so. Now look around you. Do you things really look any different? I know this is anecdotal, but I am not seeing anything close to what our parents (in my case) and grandparents went through in the '30's. I go to COSCO or the mall and it's packed. Restaurants slowed some, but only a few have closed, but that happens even in a "good" economy. RE prices are down and still dropping, but if you bought around here before 2006, you still have equity. I don't think this country could survive a '30's type depression. Too many pussies out there.