Yes, the United States is in a recession. During the current economic crisis, stock traders have been running scared as they see reports that signify a slowing economy, according to this great photo essay in Time Magazine. The super-rich are having to learn new ways to survive these days#. And the national debt clock ran out of room# to post the growing numbers "in the red," according to the Washington Post. There is just no getting around the reality. We all experience it in one way or another in our own lives.
The Bush administration, however, has been reluctant to use the "R" word, for obvious reasons. Other recessions, particularly this one in 1958#, can give us poignant and evocative clues in black and white about what real recession looks like:
Photos: The Recession of 1958
Fifty years ago, after 13 years of post-war growth, the U.S. economy hit its first economic downturn since the Depression. In April, 1958, Life Magazine dispatched a team of writers and photographers to cover the story. Here is what they learned.
Fiscal problems in the United States, and around the world, are intertwined. Recession, national debt, and deficit spending are all part of the money mosaic. Lets look at the next part. "US stares at a $1 trillion deficit#. How bad is that?" (From Yahoo! News - 10/16/08). Deficit spending has become our way of life. But everyone must operate by "guestimate" about whether the deficit will be more or less. Another unknown is the cost of the financial rescue bill, and how it will be handled in the budget's budget accounting. Congress already has plans to increase spending. And the imposing size of the deficit will inevitable influence the new president's priorities as he takes office. Meanwhile everyone is buying up treasury notes as fast as they can be printed. To quote from the article:
US government's extraordinary effort to rescue the banking system may have pulled America's economy back from the brink, but it comes at a cost – helping to push an already bloated deficit up to an estimated $1 trillion for this fiscal year.
That would be a record in today's dollars – and would represent the highest level of federal red ink as a share of the overall economy of any US budget since the 1940s. For each household, this year's deficit would pile on an extra $8,620 of federal debt.
As a result, future presidents may have to rein in spending and raise taxes to pay down that debt. If they don't, foreign lenders at some point could scale back their purchases of US debt, sending interest rates soaring.
. . . If the deficit does reach $1 trillion this year, it would represent 7.5 percent of the gross domestic product, the highest percentage since World War II when it skyrocketed to 30 percent of GDP.
Fiscal Wake-Up -- The above article, rightly, focused on long-time "voice in the wilderness," former Comptroller, David Walker:
. . . head of the Peter G. Peterson Foundation and former US comptroller general . . . part of an effort called the Fiscal Wake-Up Tour, which is traveling around the nation meeting with editorial boards and holding town-hall gatherings to explain the budget situation. . . .
Walker's focus is not just the national debt, which will grow to more than $10 trillion this year. Instead, he is looking at the national debt plus all the unfunded promises such as Social Security and Medicare, which have no future tax revenues to cover them. "At the end of the last fiscal year, that came to $53 trillion or about $550,000 per household," he says. "We may well have passed the point where the federal government's total financial hole exceeds the net worth of all Americans."
Walker estimates the US has about five years to show fiscal responsibility: "We will have to send a strong signal we can get our house in order."
"There is a silver lining,#" says another "voice in the wilderness," the fine author Fareed Zakaria, talks about "a more disciplined America." In Newsweek's great cover story from the week before last, he says: "The crisis has forced the United States to confront bad habits developed over the past few decades. If we can kick those habits, today's pain will translate into gains."
More images reflecting recession -- This same magazine issue has another fabulous photo essay called, "Hard Times#." Starting with "tulip mania" in 1637, exactly 300 years before I was born, 18 images narrate the history of a variety of economic downturns.
Today a silver lining? -- Today's news (Yahoo!'s), however, may be the start of seeing the silver lining. Ben Bernanke hinted at a rate cut and Wall Street surged. Also the leading indicators reportedly rose in September. So, for today at least, things may be looking up just a bit. It will take many more days and months, perhaps years, to know that we are no longer in a recession.
Hat Tip Key: Links from regular contributor, Jon (#).
View my current slide show about the Bush years -- "Millennium" -- at the bottom of this column.
(Cross-posted at The Reaction.)
My “creativity and dreaming” post today is at Making Good Mondays.