Hard Economic Times in US History

Many people have been adversely affected by the economic recession that hit the United States in the last few years. Termed the “Great Recession”, from December 2007-June 2009, The United States has not fully bounced back. Let’s take a look at the facts.

  • Jobs are being cut at an alarming rate, so much so, that the unemployment rate in January 2010 was at 10.6%. As recently as February of this year, that rate has decreased to about 9.5% according to the U.S. Bureau for Labor Statistics.
  • For those who are still employed, any news of layoffs that makes the front page of the newspaper leads to a paranoid, nail-biting frenzy over our own job security. Salaries have frozen, benefits have been slashed; and let’s face it, it’s now easier for employers to replace their long-time employees for the sake of cheaper labor.
  • Gas prices skyrocketed from a per-gallon average of $1.78 in 2005 to $3.56 to the present date, according to the U.S. Information Administration.
  • Home foreclosures are no longer a rarity; in fact, it wouldn’t be unreasonable to say that home ownership has become a luxury. The government’s efforts to fortify the real estate industry with programs such as the First Time Home Buyers Tax Credit or the Making Home Affordable program may be impacting the situation positively: foreclosure rates in February 2011 were at the lowest they’ve been in three years.

The Great Recession is teaching a hard lesson to young adults, who may not be used to a flailing economy. Increasing food prices and every day commodities have driven Americans to be more frugal and save. This is not the first time the United States has held afloat in rocky times.

FDR Memorial The Great Depression of 1929, which lasted into the early 1940s, is an iconic memory for Americans. It started on Black Tuesday, October 29, 1929, when the stock market collapsed. Deflation occurred, and people feared to spend money and invest further. A staggering 25% of Americans were unemployed. Black and white pictures of this era depict a desperation beyond belief: soup kitchens to feed the countless people who were unable to afford the simplest of meals; farmers who stood in dusty barren fields during the dust bowl – a devastation of the agricultural world; and the jobless, with make-shift signs to beg for employment.

Though other smaller recessions hit the United States between the 1940s to 1960’s, none were as devastating, and the U.S. continued to prosper. However, from 1973-1979, the Bretton Woods monetary system fell (the system that allowed international recovery and monetary management following WWII). It made the dollar into a flat currency, backed by no monetary value. It instead became a promise of payment with a floating value. This caused the deflation of the dollar. Other effects occurred, such as the Iranian war, which resulted in an Arab oil embargo (creating the gas crisis of 1973). Here, the Organization of Petroleum Exporting Countries (OPEC) raised the price of oil by 70%, to $5.11 a barrel. The economy was described as having underwent “stagflation“- which means a stagnant economy which is incurring inflation.

By 2001, the U.S. hit another pivotal moment: the attacks of 9/11 decreased consumer confidence, the dot.com bubble collapsed, and major corporations (such as Enron) tainted the sentiments of larger corporations and entities. After several years, the economy improved until 2007, when our recent economic woes came into effect.

It is easy to look at today’s times and address the issues with uncertainty and indifference. However, in looking back at the our past, it is clear to see that we will once again find ourselves strengthened. This recession will not last, and instead, we will soon find ourselves amid economic prosperity. We must examine these former failings and learn from them.

photo credit: Dan04

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