Woeful State of the Economy
Posted in Contributor, Economic Issues, Government & Accountability, Uncategorized on 09/18/2009 10:14 am by Elaine YuA year ago Lehman Brothers declared bankruptcy, an event that triggered the worst global economic crisis since the great Depression, so read all the headlines in the newspaper for the ensuing 7 to 9 months until recently. As furious as the pace of decimation of wealth took place, as miraculous was the recovery, again according to newspaper headlines. In the blink of an eye, it is almost surreal to believe that the stock market is up about 50% from its trough since March of this year. For some, it may appear to be simply a terrible nightmare, one that we will wake up from in a few months with things back to some semblance of normalcy. Alas it isn’t so! Real people did not and do not live in the stock market but their livelihoods are impacted by the crisis all the same. The symbiotic relationship between Wall Street and Main Street were most poignant through out the crisis – as evidenced by the massive job losses in every sector. As Wall Street engineered rounds of lay-offs, so did the real economy. And while it was Wall Street that is credited with causing the crisis, its total job loss of some 40,000 since the beginning of the crisis pales in comparison to the total of jobs lost on Main Street – to the tune of 7+ million!
According to the US Dept of Labor, since the recession began in December 2007, the number of unemployed persons has risen by 7.4 million, and the unemployment rate has grown by 4.8%. As of August of this year, the number of unemployed persons totaled 14.9 million, and the unemployment rate rose to 9.7%. The breakdown by major groups are as follows: adult men (10.1%), women (7.6%), teenagers (25.5%), whites (8.9%), Hispanics (13.0 %), blacks (15.1%) and Asians (7.5%). President Obama’s stimulus plan aims to create 2.5 million jobs by 2011, this will still leave a gap of 5 million jobs to be recreated by the companies that have made the cuts. “How” is the biggest question? Many folks are contemplating starting their own businesses but with banks shutting off the lending valve, it becomes increasingly difficult to borrow to start your own company. Recently I decided to see what the banks are doing with their TARP $ (if they are plowing it back into the system vis lending), I went to the 3 banks that I bank with to inquire about borrowing to start a business, none of them would do personal loans anymore, and if I were to start my own business, I need to be in the same field where I had prior experiences (great, loads of stock-broking jobs there!!). They all advise that I use my own savings or open a home equity line, assuming I have any equity left at all!
In 2004 the United States had 12% of its population living below poverty line, worst than 20 other first world or third world countries such as France, Libya and Thailand, considering that it is the world’s wealthiest county by many standard. I reckon that % may have gone up in the past 5 years, and it will be interesting to see what happens in the next 30 -40 years. The bipartisan Congressional Budget Office forecasts that social security + Medicare + Medicaid = 20% of the US GDP by 2050. Recently, the average (entire) US Gov’t budget runs about 20% of US GDP. At some point we will run out of money and we won’t be able to help the elderly and the poor, yet both parties are bickering and can’t agree on anything.
We are facing a huge problem on borrowed time, I know not what the right solutions are, but I know America is the land of resilience and opportunity, we will get it right one day, if we stop being divided and work towards a common goal – to re-energize a nation of hardworking folks who want to create a better future for themselves and the next generation.