CLARKONOMICS: I got a chuckle out of predictions about whether or not we’re headed into another recession. Really?!
We’re told the United States came out of the recession two years ago. Yet people saw incomes fall more in the last two years than during our official “recession” years.
The problem is that economics is better at saying what happened looking back than it is at analyzing what’s going on right now and what will be going on in the future.
We are in what has been coined “The Great Recession” even if official measures suggest we’ve been in a “recovery” for several years now.
Adapting to the new normal in a recession
Until the job market recovers, we’re basically in a recession. Now, that’s not everybody of course; some people have really thrived over the last few years. But I find it crazy that economists are wondering if we’ll go into another recession; for most Americans, it’s just been one big, long continuous recession already!
So in my book, the reality is there’s more potential for recovery than for things to get worse.
One sector of the economy and one business after another has figured out how to adapt, if they’ve survived. Airlines have parked planes. Those restaurants that could hold on are doing better because of less competition. Those are just two examples.
As a people, we remain in a pickle as we continue deleveraging, which is a fancy way of saying reducing debt. That process is a painful one. But I believe the thing to fear is not going into a new recession. Rather, the thing to have hope in is that as we improve our own situations, and as capitalists adapt, that plants the seeds of recovery.
Looking to the past for a model of the future
I can’t answer where the jobs will come from or when the recovery will come. But based on history, I believe the recovery could be quite substantial when it does come.
I was reading an economic historian recently who was writing about the two Depressions we had in this county in the 1870s and the 1890s. The opinion of the mass populace at that time was that we were toast, that things weren’t ever going back to normal. In both cases, they were wrong and robust recovery did come.
That’s going happen again. Just have faith!