Non monetary ways the economy is affecting you?

[iwrbnd]

I really hope the recession is over. I live in the midwest and it took longer for it to hit us and so will probably take longer for us to feel it imrove. Things are still tough here, I just lost my job on Monday.

A positive I see happening, though, is families spending more time together. They don't have the money to put their kids in all the activities so they are home together which means they are eating together and entertaining each other at home. That's all good!

 

[Disney Doll]

And you know englishteacha, your statement of people wanting something "right now" is the biggest cause of this economic breakdown.

We were a nation of instant gratification.
Anything we wanted, we had to have it right now.

Couldn't really afford a house? That's OK...you (the universal "you"...not specifically you) can get a mortgage that will let you finance 100% of it because you want it "right now".

Have no money saved...that's because you want the high def TV, the iPhone/iPad/iWhatever "right now" and you're going to buy it.

Can't afford a BMW but all your friends are driving one? That's OK, lease/finance it for $500/month. You can put the payment on your credit acrd if you can't quite afford it once in a while.

bicker is correct in his statement of some of this being a natural shift back to more "careful" financial management by some folks.

 

[cabanafrau]

We have restaurants and stores closing that have been in business for ages. There are articles in the newspaper that talk about which business owes X amount of dollars....etc.

It's very much the same here. We talk to neighbors, friends, people in checkout lines & over & over again we hear, "I just can't believe X closed. They've been around since before I was born." We've had several news reports about long-time family businesses closing. Businesses that have been booming for decades. Now the owners are retiring w/o being able to sell the business. Would have been unheard of 5-7 years ago.

Something that's been irritating me lately is reading about the celebrities w/ multiple homes, etc. owing hundreds of thousands even in back taxes. Just can't wait to flip the channel over ET in a couple months to read they've signed to do some movie/TV show/record contract for $1 mill+. Will they pay their taxes then?

 

[Quiksilvr]

Ditto. The point isn't to marginalize the suffering folks are feeling, but rather to highlight the reality of the situation, which can help those open to it to have more optimism for the future, and hopefully undercut the stifling impact on the economy, going forward, from folks interpreting their own situation as indicative of the broader reality.

Very good point, and this has assuredly been reflected in a structural downward shift in the demand for labor. Essentially, the more people save, the less money there is spent on certain items and services, and less money there is to pay people to make/do those things. As a structural change, it is the new "normal".

Bicker---I get what you've been saying and why you're saying it, but the human element of the recession is definitely something that has to be considered and acknowledged (not necessarily as to whether we are still "in a recession" or not, but perhaps as to whether its effects are still being felt).

I live in DC. I've been steadily employed during the entire recession, and so have most of the people I know. The government keeps hiring and isn't going out of business. My law firm's business has been quite steady. In my own life, I haven't really seen a recession. All I've done is make money off the bounce in the stock market. So, my anecdotal evidence would be quite misleading, I think, for the country as a whole.

That said, when I go visit my parents in a rather rural area a couple of hours from here, it's a stark contrast. I see many businesses that have closed and will not reopen. I know many people from "home" who have lost their jobs and who cannot replace them (not everyone can work at Wal-Mart. At some point, even they have enough workers).

The difficulty I see is that even though the economy's broad macro indicators are improving (and I'm certainly taking part in that in the markets), on the micro level of a small town or a rural economy, I don't see investment capital being used to replace the jobs that have been lost. Investing in/lending to small town businesses is just too risky right now for a lot of investors and lenders.

Personally, I predict the effects of the recession will continue to be felt strongly, especially in rural areas, for the foreseeable future. It's going to take time.

 

[bicker]

True that the new emphasis on savings might change the overall dynamic. That is if the trend towards savings isn't similar to new diets. People have the best of intentions but will they follow through? If they do what will become of the unemployed? Will the market shift to somehow accomodate the workforce? Interesting questions.

Yes, and some of that is pretty easy to predict: If people do save more, the structural change will have two possible impacts, and the actual reality will be some combination of the two: (1) a higher level of structural unemployment, and (2) more people getting paid less to do the same work that they (or someone else) used to be paid more for.

With regard to the first impact: Structural unemployment is the conceptual "lowest possible rate" of unemployment. Theoretically, there should always that many people "between jobs". Structural unemployment can vary over time, of course, though. For the longest time I remember people talking about "4%" being the structural rate of unemployment, but then in the 1990s boom suddenly we got closer and closer and closer to it, and then whoosh right past it, to remarkably low levels of unemployment. There is a question, at least in my mind, as to whether what happened was a fundamental shift in the structural rate of unemployment (as seems to be in the offing, this time around) versus just some artificial aspects (and in light of the S&L collapse and then the more recent credit collapse, I think people know what those are) that unemployment below the actual structural rate was artificially induced.

With regard to the second impact: I've already seen a good bit of this. My salary has declined as compared to 1997, specifically. My work is not worth less -- on the contrary -- it's just that (perhaps for the same reasons outlined above) I was being paid more to do my job back then. The economic shift I've been talking about will simply mean less money, less affluence, less luxury, less leisure -- perhaps in part because we took/were given/had "too much", previously.

And that's before we factor in the international impact on this, the fact that many nations that we have been used to (for lack of a better word) exploiting for decades are now negotiating a better deal for themselves. The money to pay for that justice comes right out of our standard of living.

 

[bicker]

And you know englishteacha, your statement of people wanting something "right now" is the biggest cause of this economic breakdown.

We were a nation of instant gratification.
Anything we wanted, we had to have it right now.

Couldn't really afford a house? That's OK...you (the universal "you"...not specifically you) can get a mortgage that will let you finance 100% of it because you want it "right now".

Have no money saved...that's because you want the high def TV, the iPhone/iPad/iWhatever "right now" and you're going to buy it.

Can't afford a BMW but all your friends are driving one? That's OK, lease/finance it for $500/month. You can put the payment on your credit acrd if you can't quite afford it once in a while.

bicker is correct in his statement of some of this being a natural shift back to more "careful" financial management by some folks.

And given some of our previous disagreements, it is a remarkable thing that we agree, so substantially, in this matter.

 

[Planogirl]

I will only say that the possibility of a lower standard of living certainly doesn't make me feel any better about my circumstances.

 

[bicker]

Bicker---I get what you've been saying and why you're saying it, but the human element of the recession is definitely something that has to be considered and acknowledged (not necessarily as to whether we are still "in a recession" or not, but perhaps as to whether its effects are still being felt).

No question about that -- I'm not only considering and acknowledging it, I'm placing it in perspective. Perhaps folks joining in the discussion aren't coming along all the way down the path.

The difficulty I see is that even though the economy's broad macro indicators are improving (and I'm certainly taking part in that in the markets), on the micro level of a small town or a rural economy, I don't see investment capital being used to replace the jobs that have been lost. Investing in/lending to small town businesses is just too risky right now for a lot of investors and lenders.

And as we've been discussing in the last dozen or two messages, that may be a permanent shift.

Personally, I predict the effects of the recession will continue to be felt strongly, especially in rural areas, for the foreseeable future. It's going to take time.

But that's the problem IMHO... if it is, as some of us has projected, that we're seeing (very logical) shifts in the economy, then thinking about them as "continu[ing] to be felt strongly ... for the foreseeable future] is unfounded. KnowwhatImean?

 

[bicker]

I will only say that the possibility of a lower standard of living certainly doesn't make me feel any better about my circumstances.

Well, think about that: Would you rather expect that and experience it? or be surprised by it and experience it?

 

[Planogirl]

I'd like to believe that the situation is likely a combination of factors even if this shift is for real. There might be some shift but many of the effects of the recession are still in place too. As for people suddenly becoming thrifty and saving their money, I might be pessimistic but I have my doubts that people will really change all that much. Some will but I think that many will still have that "I want it all now" mentality.

 

[Planogirl]

Well, think about that: Would you rather expect that and experience it? or be surprised by it and experience it?

None of the above. I get the point though.

 

[brerrabbit]

As with most discussions they are greatly influenced by your own point of view. I live in Texas and we have weathered even the worst part of the recession better than most of the country. I work in the Energy industry and while we are sending lots of jobs overseas, and cutting back dramatically on our US workforce I have managed to keep my job, receive raises and bonuses throughout. My wife works for our local school district and has kept her job but they are making cuts due to reduced funding, so even given that our perspective is that things are okay and the numbers that show improvements are something I can easily accept and welcome. On the other hand those living in the previously mentioned state of Michigan see things in a very different light. The Recession hit them hard and even prior to that things weren't all that rosy with the auto industry and home prices. On a national level the numbers are improving and I think that it will lead to a fundemental shift in thinking and spending for the nation as a whole. It was our overall attitude of I want it and I want it now that got us into trouble. Easy credit and greed lead our economy to abandon certain fundimentals that it was created upon.

We need to become a nation of savers as opposed to spenders but the only problem is that most agree the way out of recession is to spend. It is one of those quirks of economics.

http://finance.yahoo.com/news/Frugality-among-consumers-is-apf-3355135283.html?x=0

Right after I posted I saw this article which really explains a lot of what is going on.

 

[punkin]

True that the new emphasis on savings might change the overall dynamic. That is if the trend towards savings isn't similar to new diets. People have the best of intentions but will they follow through?

If they do what will become of the unemployed? Will the market shift to somehow accommodate the workforce? Interesting questions.

That's what I think.

It seems that people can only last on austerity for a limited amount of time. If they have the money, eventually they will spend it.

 

[Colleen27]

I think a lot of people are really embracing the back to basics/voluntary simplicity ideas right now, and that makes for busier parks and libraries and other cheap/free family outings. They're cooking at home, so the groceries are busier. And around here, their supporting local business which means the neighborhood grocery is busier than usual as fewer people make the drive to the "big boxes".

I haven't seen what you describe at the nurseries around here at all. The two big greenhouses I shop have got amazing variety, more than I've ever seen before, and they're seeing a big increase in interest in gardening (particularly food-producing plants). I start all my veggies from seed because in the past I've never been able to find the varieties I want to grow, but this year I'm seeing a few heirloom tomatoes and peppers even at KMart and tons at the big greenhouses.

We're a long way from seeing anything resembling recovery in my area, but many people seem to be adjusting and the overall mood isn't as negative as it was last year.

 

[Colleen27]

Very good point, and this has assuredly been reflected in a structural downward shift in the demand for labor. Essentially, the more people save, the less money there is spent on certain items and services, and less money there is to pay people to make/do those things. As a structural change, it is the new "normal".

And that new normal is going to mean persistent high unemployment, underemployment, and an entire class of people stuck in part-time, dead-end service jobs that will never have the opportunities of the "American dream". Economic indicators are a poor measure of that reality. We can talk all day about the market rebound and GDP expanding again, but what isn't being talked much about is that many leading economists are predicting this to be a "jobless" recovery that will leave many, many people behind.

 

[Planogirl]

And that new normal is going to mean persistent high unemployment, underemployment, and an entire class of people stuck in part-time, dead-end service jobs that will never have the opportunities of the "American dream". Economic indicators are a poor measure of that reality. We can talk all day about the market rebound and GDP expanding again, but what isn't being talked much about is that many leading economists are predicting this to be a "jobless" recovery that will leave many, many people behind.

Exactly. That is way more troubling than assuming that the recession isn't over.

 

[Crankyshank]

My state is still ridiculously far from climbing out of the recession (one of the first in, probably the last out). In fact, we haven't even hit bottom yet according to economic experts.

As far as non monetary ways the economy is affecting my area, more and more people are planting gardens from seed to save money on produce. Also, people are definitely more stressed out. They are taking more chances driving (aggressively), and are just angrier.

 

[eliza61]

And that new normal is going to mean persistent high unemployment, underemployment, and an entire class of people stuck in part-time, dead-end service jobs that will never have the opportunities of the "American dream". Economic indicators are a poor measure of that reality. We can talk all day about the market rebound and GDP expanding again, but what isn't being talked much about is that many leading economists are predicting this to be a "jobless" recovery that will leave many, many people behind.

The old normal could not be sustained because it was based on a "ghost" economic system. We see it with main street, people lived off of money that they did not have (no not all). The market rebounding does effect unemployment, companies borrow and hire based on whether their stockholders are happy (not as simple as that) but main street is called a "lagging" indicator because it's always the last to recover. Many people have dead end jobs because we have not invested in new technologies, were still on the old "manufacturing" mind set. bottom line manufacturing jobs are not coming back. Remember when we were first in every thing? First in the space race, first in research and development, first in education?
The two owners of google (I forgot the gentlemens names) were just on tv saying how they can't find "American" students with the technology background to fill positions. take a look at who is filling the classrooms at MIT grad programs. China is leading the way in alternative energies (solar, wind, etc) which will be huge while all we think about is how to fill up our huge suv's. we are too short sighted.

 

[bicker]

Would you rather expect that and experience it? or be surprised by it and experience it?

None of the above.

Hehe... would that be great?

I get the point though.

And it is such a recurring theme... one of the wisest scientists of the 20th Century, Carl Sagan, said, "... it is far better to grasp the Universe as it really is than to persist in delusion, however satisfying and reassuring."

And that new normal is going to mean persistent high unemployment, underemployment, and an entire class of people stuck in part-time, dead-end service jobs that will never have the opportunities of the "American dream".

The way the previous poster brought it up was in the context of returning the rate of saving money of some previous decade. So it is reasonable to project that the impact of returning to that rate of savings on employment will be a return to the rate of unemployment and more limited pay scales of that previous time.

The proverbial wrench in the machine is the one I casually dropped into the conversation, which has nothing to do with the recession or recovery -- that being the extent to which nations that we used to "exploit" are now insisting on a better deal for themselves. That isn't a matter of returning to the standard of living of a previous time, but rather going back a bit further, as they force us to trade off some of our standard of living for the economic justice they're imposing on us.

Economic indicators are a poor measure of that reality.

"It has been said that democracy is the worst form of government except all the others that have been tried." - Winston Churchill

In the same vein, economic indicators are a "poor measure of ... reality" except all the others that we have available to us. (In other words, they're the best measures, even if they aren't perfect.)

We can talk all day about the market rebound and GDP expanding again, but what isn't being talked much about is that many leading economists are predicting this to be a "jobless" recovery that will leave many, many people behind.

Colleen, with respect, I don't think you're reading what you're replying to, because that's what some of us absolutely have said. I've said it again earlier in this reply to your message.

 

[bicker]

My state is still ridiculously far from climbing out of the recession (one of the first in, probably the last out). In fact, we haven't even hit bottom yet according to economic experts.

Yeah, RI really is bewildering, especially given its proximity to MA... you'd think that there would be some spill-over. NH is also in recovery. I don't know how to account for the difference.