Our Economy

Why Is Our Economy Not Getting Better?

WASHINGTON — The U.S. economy grew at a much slower pace this spring than previously estimated, mostly due to the largest surge in imports in 26 years and a slowdown in companies' restocking of goods.

Can the average American even come up with an accurate definition of our economic condition? Are we in a "Recession" or a "Depression?" What is the difference? Who can tell us? None of the Political Talking Heads are telling for one simple reason: There is not a universally agreed upon definition of the term "Economic Depression". If you ask 100 different economists to define the terms recession and depression, you would get at least 100 different answers.

The renowned financial publication The Economist reports that, based on the characteristics of the current financial crisis, the U.S. is in a depression, not a recession. The Economist says a "Depression" …... “is the result of a bursting asset and credit bubble, a contraction in credit, and a decline in the general price level.”

The standard newspaper definition of a "Recession" is a decline in the Gross Domestic Product (GDP) for two or more consecutive quarters. This definition is unpopular with most economists as it does not take into account the changes in the unemployment rate or consumer confidence.

So after reading and hearing all this economic analysis mumbo-jumbo in the news for the past three years, trying to find out when our economy will improve, and realizing that we're entering into our 3rd year of this economic freefall, I find myself asking "When will it all end? When will things begin to improve?" I remember in early 2008 the Talking Heads were telling us we would see significant improvement in our economy in the later half of that year. However, since then things have only become worse.

A familiar sign all across America

Now I've decided to take a look at the situation through my own eyes, activate a little common sense, and come up with my own analysis. The facts and findings I came up with are really quite simple:

1. In the United States over 2.5 million homes have been foreclosed on since this current economic condition began in 2007. That's more than 3 times as many as were foreclosed on during the Great Depression of the 1930's. The Talking Head's officially state that the United States has a current 9.6% unemployment rate. I find it interesting that this "released figure" has always held itself steady for the past 3 years at just under 10%. The Talking Heads know that if a 10% or more figure is announced, it would undoubtedly cause uneasiness and perhaps pandemonium amongst the minions.

But realistically, this fictitious unemployment rate doesn't include the millions of independent contractors and self employed Americans who have gone belly up or the millions of Americans who have exhausted their unemployment benefits; those who have fallen out into the streets only to be stepped over and forgotten. And it certainly doesn't take into account the tens of millions of Americans who are now grossly under-employed, having lost their $50,000.00+/yr. career jobs and have now taken on menial jobs at places like Burger King and Walmart for minimum wage in order to survive, but certainly not earning enough to keep their homes from foreclosure. The Talking Heads don't include these groups. But if they were factored into the whole unemployment equation, the U.S. unemployment rate would be closer to 25%!

Most Americans have never seen a time of such economic turmoil - and those who have, have only the Great Depression of the 1930's to compare it to. The rich don't really care because for most of them, life rolls merrily along under their protective glass bubbles that their disturbing wealth easily affords them.

America has seen several bad economic recessions since the 1930's but none has ever resulted in an unprecedented 2.5 million home foreclosures and an actual 2 year sustaining unemployment rate of close to 25%, sending the net worth of just about every American imploding. So, is this a recession or a depression? No, this is not a recession. For the past several years we have been living through The Great American Depression II!

But the question remains. WHY is our economy NOT getting better? Is there hope? Can we ever come out of this? My answer: Yes, and yes.

NEXT >>