Recession or Depression which one are we in?

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WilT

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I was just wondering when a Recession turns into a Depression. It’s been like this for many years now and I still have friends I know that aren’t working, unemployed, and exhausted of looking for work after several years of trying. 2 of 7 people I know off hand are fully employed. 3 others below part time work, and then another 2 unemployed. To me unemployment rate is at 20% or higher and not what the news companies tell us.:confused::confused:
 
So, is it possible we are not in a Recession or Depression because of what the Market may or may not reflect in growth! The fact a great amount of people in my area does not have an effect on determining the recession/depression factor?
 
Apart from the technical economics definitions, a useful rule of thumb is: A recession is when my neighbor loses his job; a depression is when I lose MY job.
 
WilT said:
So, is it possible we are not in a Recession or Depression because of what the Market may or may not reflect in growth! The fact a great amount of people in my area does not have an effect on determining the recession/depression factor?
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Your local area may indeed be in a recession or depression. The published statistics are based on national economic growth. Some areas of the country have already rebounded (such as Texas, thankfully) and this affects the national figures even though you may not see any economic improvement where you live.
 
WilT said:
I was just wondering when a Recession turns into a Depression. It’s been like this for many years now and I still have friends I know that aren’t working, unemployed, and exhausted of looking for work after several years of trying. 2 of 7 people I know off hand are fully employed. 3 others below part time work, and then another 2 unemployed. To me unemployment rate is at 20% or higher and not what the news companies tell us.:confused::confused:
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It’s not unusual for recessions to come every 7 years or so, it’s often a cycle. Recoveries often happen 2, 3 4 years after a major market crash. That hasn’t been the case since the crash of 2008. We’re now a good 6 years after the last crash and we’re barely treading water.

The biggest difference between today and say the 1970’s and the Great Depression is the landscape of our economy. We’re now more than ever in a global economy. The state of other economies affects our economic health. A little teeny tiny country like Greece defaulting on a loan can send shockwaves through the global economy and impact us. In the past we were like a submarine, if there was a hole in the hull, the water could be contained in a chamber, not flooding the entire ship.

For sure the unemployment rate is higher than 6%. If you exclude all those who quite the job market looking for jobs that’s how the government arrives at 6% . . It would easily be doubled or triple that if you included all those that gave up looking for jobs in the data
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Besides globalization, depopulation, the desire of world banks to rely on credit to establish wealth, the other invisible force that’s killing us is inflation. The inflation numbers are also fudged by the government. If our salaries do not rise consistently with inflation, we have to rely on credit more, we have to rely on the cheapest goods we can afford, and that usually comes from companies outside the US to produce.

The deflationary part is what the government has to face. With no market pressure to force governments to raise interest rates, the government does what it can to devalue our currency on world markets. That’s good for them because they don’t have to pay as much interest on debt, but bad for you and i because we get pinched at the gas pump and with food.

You ever wonder why the stock market is at all time highs now? How is that possible when so many are out of work? It’s for several reasons. One, people get 0% if they put their money in a savings account. So what do you do? You’re force to take a risk getting a higher return on stocks. Two, companies have to invest just like you and I, they either buy other companies and stock. Or they keep large amounts of cash out of fear. The large amount of cash makes it appear like they’re profitable, thereby leading even more investors to buy even more stock. In all these cases, the stock markets rise, money gets shifted out of our country to other countries for cheap labor, and with it the jobs.

Contrary to popular belief, the US president is not instrumental in reversing the fortunes and failures of our economy. The most powerful person in the government, even though it’s not part of our Federal government is the Federal Reserve Chairman Until a paradigm is initiated by the Federal Reserve to allow the credit and money to flow to the entire economy and not just to large banks and corporations, we will be in this pickle a long time. If we’re in this type of situation when markets are at all time highs, i don’t want to imaging what the next market crash/correction will do
 
paulrxp said:
It’s not unusual for recessions to come every 7 years or so, it’s often a cycle. Recoveries often happen 2, 3 4 years after a major market crash. That hasn’t been the case since the crash of 2008. We’re now a good 6 years after the last crash and we’re barely treading water.

For sure the unemployment rate is higher than 6%. If you exclude all those who quite the job market looking for jobs that’s how the government arrives at 6% . . It would easily be doubled or triple that if you included all those that gave up looking for jobs in the dat

You ever wonder why the stock market is at all time highs now? How is that possible when so many are out of work?
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Nice summary. So true.
 
Corki said:
Your local area may indeed be in a recession or depression. The published statistics are based on national economic growth. Some areas of the country have already rebounded (such as Texas, thankfully) and this affects the national figures even though you may not see any economic improvement where you live.
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👍
 
Ronald Reagan used to say something like, “It’s a recession when it affects other people, it’s a depression when it affects you!”🙂
 
I watch the news every day and it gets a bit old to always hear them talking about how great a shape we are in, and how we are coming out of the recent recession…I really wonder if we can trust the Govts figures and numbers on this too, I mean it would be in their interest to ‘fudge’ the numbers and always talk positive about the economy, even if its not in great shape.

Most people I see and talk to, arent in good shape, they arent buying new cars, homes, expensive products, they are just getting by on what they make.
 
mikekle said:
I watch the news every day and it gets a bit old to always hear them talking about how great a shape we are in, and how we are coming out of the recent recession…I really wonder if we can trust the Govts figures and numbers on this too, I mean it would be in their interest to ‘fudge’ the numbers and always talk positive about the economy, even if its not in great shape.

Most people I see and talk to, arent in good shape, they arent buying new cars, homes, expensive products, they are just getting by on what they make.
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👍👍 I agree
 
paulrxp said:
You ever wonder why the stock market is at all time highs now? How is that possible when so many are out of work? It’s for several reasons. One, people get 0% if they put their money in a savings account. So what do you do? You’re force to take a risk getting a higher return on stocks. Two, companies have to invest just like you and I, they either buy other companies and stock. Or they keep large amounts of cash out of fear. The large amount of cash makes it appear like they’re profitable, thereby leading even more investors to buy even more stock. In all these cases, the stock markets rise, money gets shifted out of our country to other countries for cheap labor, and with it the jobs.
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Wall Street also rewards companies when they announce layoffs. This is often in spite of the fact that all the company does is spin the workers off into a separate company and still has most, if not all the same expenses, just under a different category in the income/expense statement.
 
I’m not sure the definitions are terribly helpful in telling us whether we’re in a good economy or a bad one.

To begin with, the GDP grew during the “Depression years”, sometimes considerably higher than now. But does that mean there was more than one depression in the 1930s interspersed with “good economic times” when GDP went up?

The stock market also went up at times. Unemployment ranged from about 9-15% to 25%, depending on who you read, with no “fudging” by not counting those who were no longer looking for work or opted into SSD or SSI, because there was no SSD or SSI. Right now, the “real” unemployment rate is close to that 15% the last I knew. Some claim it’s much higher than that.

But the sense of it being a depression was there in the 1930s regardless of any of that. And GM didn’t even go under duing the Great Depression. It sold fewer cars than before, but it didn’t go bankrupt.

One big difference between then and now is that there was no welfare, no food stamps, no SSD, no SSR, no Medicare, no Medicaid, I have said at times that if we didn’t have those, the soup lines today would likely dwarf those of 1936. And, of course, people who don’t have employment still can have welfare-based “incomes” as high as $60,000/year, Undoubtedly, though people on welfare, SSD and so on don’t spend as much as many or most people who are working, they still consume at a fairly normal rate. Had the government done that in the 1930s, I don’t know that we would be calling it a depression in the history books.

But terminology aside, what is the real state of the economy? Well, the well-educated and the well-connected are doing fine. But that was true in the 1930s too. As my grandfather used to say “yes, unemployment was 20% or so, but that meant 80% or so were employed, and some did better during the depression than before it.”

Hiring is flat, negative when the new workers are counted. And when one considers that all “new” jobs in the last year went to recent immigrants, it doesn’t seem too favorable. Banks are very “long” on money because businesses don’t want to borrow for expansion.

What we’re in might not be a depression or even a recession, technically, but we are certainly in a moribund economy.

And one of the biggest reasons for it is uncertainty. Businesses can’t “pencil out” future costs because we have a radical government that keeps changing the potential formulae. What will taxes be? What will heathcare costs be? What will energy cost? What will transportation cost? What will regulatory costs be? Nobody can figure those out because changes in them are arbitrary and caused by a government that wants them all to increase but never tells us how much it wants them to increase, and likely doesn’t know itself.
 
sallybutler said:
Wall Street also rewards companies when they announce layoffs. This is often in spite of the fact that all the company does is spin the workers off into a separate company and still has most, if not all the same expenses, just under a different category in the income/expense statement.
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It rewards them when the layoffs are real too. Sometimes “profitability” is actually negatively influenced by expansion, and positively influenced by contraction. One sometimes gets a nervous feeling when one sees a company’s profits go up as a percentage, but cash flow go down.
 
mikekle said:
I watch the news every day and it gets a bit old to always hear them talking about how great a shape we are in, and how we are coming out of the recent recession…I really wonder if we can trust the Govts figures and numbers on this too, I mean it would be in their interest to ‘fudge’ the numbers and always talk positive about the economy, even if its not in great shape.

Most people I see and talk to, arent in good shape, they arent buying new cars, homes, expensive products, they are just getting by on what they make.
Click to expand...
👍👍
 
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