Another Trip to the Perspective Store

Greetings from the Left Coast, where we here at Left Coast Blues do the heavy thinking for those who just can’t be bothered.

Public opinion polling over the last several months has revealed an interesting paradox: By large majorities, Americans apparently believe that the state of the country is terrible. However, by large majorities, they also describe their own status as satisfying and optimistic. As recently as October, a Pew Research poll showed that 88% of Republicans and 77% of Democrats said they were either “very happy” or “pretty happy” with their lives. This is at a time when, according to Gallup, 78% of Americans are negative about the state of the U.S. economy, and the percentage of Americans who say that an economic depression in the next two years is “very likely” has grown to 35%. I find that astounding.

Is it possible that the incessant media drumbeat of negative news is responsible for this contradiction? It’s obvious that most media outlets try to cast their new stories in superlative terms: the biggest since, the worst since, the most since, the lowest since, etc., etc. And sometimes this tendency is taken to ridiculous extremes. So as I’ve watched the continuing breathless coverage of the current recession, I have once again been driven to look for some perspective.

Most people alive today have never lived through an economic depression, and therefore have no idea what one is really like. In 1930, the nation’s Gross Domestic Product (GDP) shrank by 8.6%. In 1931, GDP fell by another 6.4%. In 1932, it shrank by a full 13%. National unemployment was at 25%, and wages for those still employed fell by 42%. The unemployment rate stayed in double digits until 1941, when we were pulled out of the depression, not by brilliant government programs, but by World War II.

As for 2008 – after posting 1% GDP growth in Q1 and almost 3% growth in Q2, Q3 GDP declined by…are you ready for this?...one-half of one percent – which was, of course, reported as “the biggest decline since 2001.” The national unemployment rate last month was 6.7%. Certainly there are places in the country where the unemployment rate is much higher – Flint, MI, for example, is nearly at 11%. But there are also many places where it is much lower. Here in Seattle it’s lower than the national average - about 5.5%. And remember that many economists still consider anything under 5% to be “full employment.”

Here is a graph of the unemployment rate over the last 50 years, courtesy of the Bureau of Labor Statistics:

As you can see, we spent most of the period from 1975 through 1986 with a higher national unemployment rate than we have right now.

I know that’s not much comfort if you are one of the unemployed. And I know that people are hurting, and I don’t seek to minimize their pain. But despite what you may hear or read, what we’re going through now isn’t even close to depression-level badness. Not. Even. Close. We’ve come through much worst times than these, and we’ll survive this downturn, too. And we’ll do it the way we always have: by ordinary Americans coming together, helping each other out, and getting up every morning and doing what needs to be done.

Thanks for listening.