Remembering the Great Recession
By Tom Baxter
Officially, what has come to be called the Great Recession ended nearly three years ago, although Friday’s paltry jobs report was yet another demonstration of how hard it’s been for the nation to put it in the past tense. Still, there has been time now since the economy hit a bottom and began this all-too-modest recovery to begin thinking about what the Great Recession really was, and what lessons from it we’ll pass on to future generations.
When parents tell their children and grandchildren about it decades from now, they will first have to struggle with the Orwellian nature of the name. English provides a perfectly good word for a really big recession – depression – but for telling reasons, we’ve shirked from this usage. (It’s somewhat the reverse with World Wars: the first was called the Great War, while the second was only World War II.)
One reason we didn’t call this the Second Depression is that its impacts were softened by the programs which emerged in the 1930s and 1960s to form the main part of what we call the social safety net. The gaunt faces of those old Walker Evans photographs are what the Great Recession could have looked like without Social Security, Medicare, Medicaid, TANF and food stamps.
Yet there was plenty enough loss of personal wealth, bankruptcy, and unemployment to mark the Great Recession as something dramatically different than the recessions of recent decades. Sheer terror – fed by the stories we ourselves heard from our parents and grandparents – surely played a role in our avoiding the more ominous word. And perhaps a reluctance to compare our hardships with those of the Greatest Generation. There are soldiers getting off the plane at Hartsfield-Jackson every day who have withstood more months in combat than any combatant in World War II, but this is seldom noted.
This all assumes, of course, that the Great Recession doesn’t pass into the nation’s memory as only a footnote to something much larger. It was noted after the Lehman Brothers collapse that U.S. markets lost the equivalent of India’s GDP in a single day. That was just a coincidence, but the downturn here can in part be linked to a restructuring of the world economy marked by the rise of Asian markets.
The long crisis in job growth, directly related to this restructuring, really goes back to the 2001 recession, after which job growth has never reached previous post-World War II levels. Even if the economy doesn’t teeter into recession again, it could be another five years before unemployment again reaches 5 percent.
The near-collapse of the newspaper industry was another development which began before the 2007 collapse. This only accounted for a small percentage of the nation’s jobs, but it’s worth noting because the decline of newspapers was directly related to a fundamental change in the way we buy and sell things, and that is another of the larger forces affecting the economic downturn.
This was not a crisis which affected every state and every sector of the economy in the same way. Thanks to the Associated Press, we actually have a county-by-county, time-lapse picture of the economy from the beginning of the recession in 2007 up to May 2011. It’s worth spending some time with each of the categories – unemployment, foreclosure, bankruptcy and overall economic stress – to understand how the recession evolved.
In particular, note how the Southeast, including Georgia, consistently was worse off than much of the country in the rate of bankruptcies, and how slowly it has recovered from its lowest point. That may lend to the impression, from this Southerner’s perspective, that this was disproportionately a small business recession and a period ruinous to many of the family fortunes built around those businesses.
That helps explain the rise of the Tea Party movement in the aftermath of the 2007 crash and the banking and auto industry bailouts. Many voters who didn’t have anything to start with still felt a sense of outrage over the bailouts, but the anger was sharpest among those who had not, themselves, been bailed out.
This was a recession which affected the most highly leveraged sectors of the economy in the most visible way. A friend who travels across the state frequently noted recently how the signs of the downturn — empty strip malls, subdivisions with no residents — become more frequent the farther he gets out into the exurbs. But this was also a recession which ultimately has had a terrible impact on inner cities and older subdivisions. There are neighborhoods in South Atlanta where the foreclosure rate reached the levels of South Florida and Las Vegas.
This was a recession which started at the top of the age curve, among homeowners who saw decades of mortgage payments evaporate in the real estate collapse, and spread downward to that job-hungry generation lingering in the basements of foreclosed homes.
The grave danger is that the lingering effects of financial collapse will continue to haunt that generation for decades to come. Our parents and grandparents created enduring stories of resilience and determination out of the hard times they went through. Not to say that what they told us wasn’t true, but a lot of the good they did came from their reshaping of their misery into lessons they could pass on. For their own good, the children of this Great Recession need to get about the business of reshaping it for themselves.