There is no financial Apocalypse.

by WyldKard on February 2, 2009

Bread-lines are scary. On a daily basis, it seems that the media wants everyone to believe that the American way of life has ended. There are even comparisons, frequently so, about the state of the U.S. today and the state it was in during the Great Depression. There are even some who are convinced that we’re in a depression, and not a simple recession. Meanwhile, even grasping that the economy has turned down of late, we still wonder what the majority of the fuss is about. There are no bread-lines, people, and we are not living in a dust bowl!

Fortunately, more eloquent sense comes from Trent at The Simple Dollar, who agrees that the media is not the best source for information about the financial crisis they keep shouting about. When one breaks down the numbers, things certainly seem less scary:

…the actual unemployment rate changed from 4.9% to 7.2% from December 2006 to December 2007 – a difference of 2.3%. In other words, out of every 100 people I know, two more should be unemployed right now than a year ago – and that’s pretty accurate.

What about consumer spending? Most accounts have consumer spending dropping about 4% during 2008, which makes it appear to be a truly terrible year. However, what’s being left out of that picture is that 2008 had virtually no inflation – almost every other year has at least 3% inflation, which artificially boosts that consumer spending number. In a year with normal inflation, the consumer spending would have appeared unchanged and thus there would be little or no panic about it.

Our experiences are similar to Trent’s: those we know who, during the period of this purported financialpocalypse, lost their jobs, managed to find new ones rather quickly. At present, only a couple people we know haven’t found gainful employment, but that’s not necessarily because jobs don’t exist. Rather, jobs they want don’t exist, but that can be true even when the economy is doing well. (For example, one friend quit her job because she wanted to find a better one on the opposite coast. One friend who lost his job found a better paying one within a couple weeks. And another friend who remains unemployed has turned down a number of admittedly shitty jobs, but has still received job offers.

That’s not to say that very fundamental lifestyle changes shouldn’t take effect in the U.S. To the contrary, Americans are consumers of the worst degree, with absolutely no comprehension of sustainability or future impact. That’s in great part because for the last hundred years, Americans have managed to piss away money on consumer goods, and live a disposable lifestyle that simply cannot exist long-term. This goes hand-in-hand with financial sustainability, and why we urge the new Presidential administration to pimp, quite severely, a infrastructure. While such an initiative is certainly no magical bullet, it would certainly steer the U.S. in the right direction, and with firm lifestyle education beside it, will ensure we don’t succumb to our man-made cancers.

In the meantime, stop comparing today with the Great Depression. It’s just… depressing.

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