Is America Falling Into A Depression?

By James Donahue

An economic depression is defined as a period of drastic decline in the economy characterized by decreasing business activity, falling prices and unemployment.

Since the Great Depression, that was international in its scope and lasted about a decade, politicians and economists seem loath to define economic declines, such as America is now experiencing, in such terms. Instead they like to use an alternative word: “recession,” which is, in a sense, about the same thing.

Yet an examination this week of recent labor department statistics indicates that America is, indeed, in a severe economic slump with a large percent of the work force left out of work.

While it is almost impossible to take federal unemployment statistics, based upon applicants for unemployment assistance during given periods of time, and use them to calculate the real number of people out of work, one glaring statistic gives us a frightening glimpse of what may be reality.

The report notes that some states like Ohio, are reporting more than a 5 percent unemployment rate, yet there is a total employment of 146 million out of a total employment-population ratio of 62.7 percent. That suggests that when counting the total potential labor force in the nation, and comparing it to the number of people actually holding jobs, 37.3 percent of these people are out of work.

That is a scary statistic when we consider that during the very heart of the Great Depression in America, in 1933, the government calculated that 24.9 percent of the work force was idled.

The effects of this massive unemployment field are not being observed in long soup lines and other public ways as was seen in 1933, largely because of government assistance programs like the issuance of food stamps. But even this is beginning to catch up on us.

New government figures indicate that the number of Americans receiving food stamps could reach 28 million this year, which would be the highest number since the program began in the 1960s. Especially hard hit are workers in Midwest states like Michigan, Illinois and Ohio, where automobile, home appliance and other manufacturing plants have moved overseas in a quest for cheap labor, leaving hundreds of thousands of workers without jobs.

Now with fuel costs rising to about four dollars a gallon, shipping costs of food, clothing and other goods is rising proportionately, thus intensifying the struggle among the unemployed and underemployed to keep food on the table and cover the basic costs of living.

Young American families, never taught the art of “cooking from scratch,” are saying the monthly government food stamp program, which averages about $100 a person per household, is not enough.

We may not be willing to admit that the nation is facing a deep state of financial depression, but from all appearances, this is exactly where we are. Jobs are disappearing, unemployment lines are growing longer, and property values are collapsing. The difference between 1933 and now is that international factors, like the rising cost of fuel, are causing an increased cost of producing and delivering food, clothing, building supplies and other basic household items.

Without jobs, and even with basic government assistance programs, people are not going to be running to the local Wal-Mart or Safeway to buy non-essential goods. They will be turning to the basic necessities like food, coats, and shoes, mostly for the children. If they still have jobs, gasoline and perhaps auto parts and tires will also be among the marketable products.

No more new televisions, computers, ipods, frozen dinners or summer vacation trips for middle-income Americans. In fact, the concept of middle-income may soon be a thing of the past. Folks will either be extremely wealthy or extremely poverty stricken. There aren't going to be many falling in-between.

When we reach that point, can we count on the rich to care for the poor? Don’t hold your breath.