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Dodging Recession, Feeling Depressed

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The Tampa Tribune

Published: June 15, 2008

The economy has defied persistent predictions that it would run out of gas, but everyday working folks are feeling a financial squeeze they can only define as hard times.

The economy is in a peculiar state of contradiction that has no name.

Technically there is no recession, yet consumer confidence is at a 16-year low. A USA Today poll found 54 percent of the public thinks their standard of living hasn't improved at all from five years ago. Only 45 percent of us think our children will live better than we do now.

That's a sorry state of affairs for the world's leading economic power.

The stimulus rebate checks now arriving in mailboxes, coupled with key interest rates at a four-year low, have provided grounds for the White House to predict stronger growth right around the corner. Retail sales in May were twice what economists predicted.

A rebound can't come too soon for the middle class, which has seen gains it worked hard to achieve disappear in the smoke of higher prices and lower home equity.

Median household income, adjusted for inflation, is flat. Households had more spending power in 2000 than they did in 2006.

During that period housing prices soared so far above incomes that a crash was inevitable. Now, new foreclosures and late payments are at their highest rate since tracking began in 1979.

But every dark cloud in this new, indescribable economy has a silver lining. The mortgage crisis has made houses more affordable, and mortgage applications last week were up.

Gasoline is now over $4 a gallon, but the Energy Department predicts the price won't be much higher than that next year.

The most recent jobs report brought the unpleasant surprise of the biggest jump in jobless claims in 22 years, but the silver lining is that the current unemployment rate of 5.5 percent is very close to the average over the past 20 years.

And fewer workers spending fewer paychecks will help cool inflation, which is expected to reach 3.9 percent this year. Next year, it's expected to be down to 2.6 percent.

The trouble is, no one really knows what to expect because we haven't been here before. These unusual times demand more creative responses from government than has been evident so far.

When improvements are made to transit, when four-day workweeks become common, when a network of safe corridors are available for bikes and scooters, when tax reform is made permanent, when schools put more emphasis on the skills workers need, and when the president has more to say than that he is "monitoring the situation," then it will be easier to expect a better world for our children.

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