Most of what the public hears from the government and from the media indicates that the economy is sliding into a recession, perhaps a deep one. Consumers is not buying that at all. They see the world in much more dire shape.
According to the CNN/Opinion Research Corp. poll, "Nearly six out of ten Americans believe another economic depression is likely." And those surveyed know what a depression is. They understand that it would mean a 25% unemployment rate, bank failures and an increasing number of homeless Americans.
Most economist asked to respond to the results said that no depression is likely. They government's current programs to buttress the economy are too widespread. Unemployment might hit 7% or a bit more, but that would be it.
Of course, many economists were slow in calling the recession, so their track records as forecasters are in doubt.
What stands out from the survey is the extent to which Americans have succumbed to a feeling of despair and hopelessness. To be resigned to the near-complete death of the economy and almost unimaginable national suffering gives every indication of people being certain that the worst is coming and believing it is a near-certainty.
The depression may not come to the economy, but it has certainly come to the minds of the average working person.
Douglas A. McIntyre is an editor at 247wallst.com.
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Reader Comments (Page 1 of 1)
10-07-2008 @ 11:17AM
David said...
People are nervous, but unemployment numbers are still fairly good right now. People are spending, but they are more cautious about what they buy. Recessions are a normal part of economic ebb and flow. The booms and busts of the dot com and housing bubbles have caused a big mess, but many saw it coming. If you didn't, then you were blind. This is why Congress has egg all over their face.
We all want to kick everyone out of Congress and clean house right now. They were and still are responsible for oversight. One cannot blame Wall Street with a straight face because Wall Street's job is to make money. It is government's job to govern, provide oversight, enforce and make law. This is why you see congress blaming Wall Street, because they want to deflect the issue away from themselves. Government was the most major player in all of this mess.
10-07-2008 @ 11:34AM
hank said...
we aren't technically in a ecession YET-----however, they will find a way to blame it on Bush.
We are a Country of Whiners-----things aren't going too well now, but things will change for the better---no thanks to Nancy Wimposi and Harry "the loser" Reed.
10-07-2008 @ 11:44AM
beachpaul said...
The only depression is between everyones ears. We have to actually pay back all the money we borrowed. Depression? We may have to get a part time job to do it. It might take a year or two to pay it. What? Get rid of the premium cable package? Read a book? Are you crazy! Why can't I make a quick ten or twenty thousand flipping a house? I just painted the inside for cry'n out loud! What about my 401K, can't I raid that, cheer myself up? How about buying stocks cheap and flipping them! Maybe Sirius? It's cheap! I can flip it in a week or two! Who wouldn't want to pay for radio when you can listen for free? This is America! Anyone can get rich. After all, behind every great fortune lies a crime. Depressed? Get over it!
10-07-2008 @ 11:50AM
william lindblad said...
David, you are right on the money. We are here because of the lack of oversight, specifically on the part of the House and Senate finance and banking committees. They are in charge of watching and controlling the economy. The Fed has had the power to control predatory lending in the mid 1990's. The OFHEO (office of federal housing enterprise OVERSIGHT) was, and still is, the overseer of Fannie and Freddie mae. Even the dictionary defines "oversight" as a Congressional function. Yet, you are correct, the wish to blame someone else. Having another Senate committee, especially one headed by Henry Waxman, is adding insult to injury. The people do not stand a chance unless the free press starts to wake up a tell it like it really is.
As to a depression - yes, very possible. Unemployment figures are generally much lower in reporting than actual. As I see it, the outcome is going to be dictated by the price of oil as nearly a year of high prices have depleted consumer resources, both here and abroad. The price of food is high all over and in some economies, this has been devastating. With so many things changing daily the outcome is hard to predict, but to be sure there are currently few bright spots.
10-07-2008 @ 12:48PM
Iridium said...
The reason why we are heading toward a depression is becuase of the disparity between corporate boards and the average worker. You can't run an economy when the average CEO pay is 275 times the average worker. Too much money is tied up in personal fortunes rather than flowing through the doors of small business.
For the longest time I have been saying that the unemployment rate does not matter. It is the quality and pay of the jobs where people can be employed that matters. With the majority of available jobs in the service sector you can see unemployment jump from 8% to 20% overnight.
The service sector relies on consumer spending to drive employment. Since service does not produce a product of any value there is nothing lost when the job evaporates.
A mall store can not afford to keep 9 people employed if the per day sales drop below the labor cost. This removes even more money from the consumer spending pool. Once that pool starts to evaporate as it just truly has the downward spiral is impossible to stop.
Without quality jobs that produce a product of value there is no way to right the economy. During the spending binge the economy was based on housing and retirement equity. Now that source of money has evaporated as well. What we see is that there is not enough real money to sustain the economy.
I don't know anyone can miss that when the largest employer in the nation is Wal-Mart. Ask yourself, Can people who work at Wal-Mart afford a $250,000 house?