Forget recession. Is America in the midst of a full-blown, no-joking, outright depression?
"If the notion that we are merely living through the aftereffects of a mere 'recession' that ended in 2009 sounds somewhat ridiculous, that's because it is," says Richard A. Posner, a federal judge and law school lecturer based in Chicago. "If we were being honest with ourselves, we would call this a depression. That would certainly better convey both the severity of our problems, and the fact that those problems have no evident solutions."
Posner is an authority on both the law and economics, a man widely cited for his insight and analysis.
So is Posner right?
We usually think of a "recession" as a period when there have been straight quarters of economic decline. A "depression" is something worse. It's a 10-percent drop in the gross national product, or a decline that lasts at least three years, according to The Economist.
But forget academic definitions. When a large percentage of the population is hurting, it's a depression.
- If you've lost your job, it's a depression.
- If you're underpaid because you're afraid to leave your job, it's a depression.
- If your mortgage debt is bigger than the value of your home, it's a depression.
- If you've saved for years and now your nest-egg produces virtually no income because interest rates are near zero, it's a depression.
- If you don't have health insurance and break your arm, it's a depression.
- If you can't send your kid to college even with two scholarships, it's a depression.
- If your kid graduates from college and can't get a job, it's a depression.
- If your company no longer has the skills or equipment to fix something made in America 30 years ago, it's a depression.
- If you're a government worker with 20 years on the job and your governor thinks money can be saved by reducing your benefits or eliminating your position, it's a depression.
- If your company wants to increase shareholder returns by downsizing, rightsizing, reorganizing or restructuring, it's a depression.
- If corporate leaders get executive bonuses and your salary is frozen, it's a depression.
- If your employer is making big profits, paying almost no taxes and cutting back your benefits and hours, it's a depression.
- If you're a skilled employee and you must compete with workers overseas who make 75 cents an hour, it's a depression.
- If you're a farmer and your crops lack water, it's a depression.
- If your law firm has cut back on its professional staff, if your college no longer grants tenure, if the human resources department has 500 resumes for your job, it's a depression.
What do you think? What's your definition of a depression?
This piece was published originally at OurBroker.com, a leading real estate and personal finance site.