The State of the Economy

As you may have surmised from my slightly sarcastic posts last week, I find little of real educational value regarding financial topics in most consumer publications. But Time had an article 'The Long Haul: the U.S. Economy" which provides spectacular perspective on how to view our current economic situation. Here are some compelling excerpts:

If America's economic landscape seems suddenly alien and hostile to many citizens, there is good reason: they have never seen anything like it. Nothing in memory has prepared consumers for such turbulent, epochal change, the sort of upheaval that happens once in 50 years.

The outward sign of the change is an economy that stubbornly refuses to recover from the ... recession. Unemployment is still high; real wages are declining. The current slump already ranks as the longest period of sustained weakness since the Great Depression.

That was the last time the economy staggered under as many "structural" burdens, as opposed to the familiar "cyclical" problems that create temporary recessions once or twice a decade. The structural faults ... represent once-in-a-lifetime dislocations that will take years to work out. Among them: the job drought, the debt hangover, ... the real estate depression, the health-care cost explosion and the runaway federal deficit. "This is a sick economy that won't respond to traditional remedies," said the chief economist at Pittsburgh's Mellon Bank. "There's going to be a lot of trauma before it's over."

The U.S. workplace is "in a profound, historic state of turmoil that for millions of individuals is approaching panic," according to labor consultant Dan Lacey, publisher of the newsletter Workplace Trends.

Bank regulators clamped down on lenders, while borrowers either swore off the credit habit or were deemed bad risks. The result was a credit crunch that has severely hurt businesses, especially small ones.

I hope that you will read this entire article and consider what it means for us going forward.