Every link of America’s observation-orientation-decision-action loop is broken. One example of a broken observation is our blindness about America’s fading economy. As seen in the worries about a lost decade ahead, similar to that Japan experienced following the 1989 bust (see Wikipedia for details). That would be unpleasant, but the reality is worse: we just experienced a lost decade.
The really bad news: the past decade was our last opportunity to address our looming problems (high debt plus retiring boomers) before they hit. We missed the turnoff for the easy options.
Contents
- Our lost decade
- Some implications
- Afterword and for more information
(1) Our lost decade
Some changes since July 1999:
- Total employment: up 5% from 134 million in July 1999 to 140 million in July 2009. (source: BLS)
- Total population: up aprox 12.7% during this period; this is not strictly comparable to the employment change (source: Census).
- Total hours worked in the private sector: down 2.5% during this period (see graph, with data thru May 2009)
The bottom line from these and other changes: the employment to population ratio, back to where it was in 1983.
Making things worse: real wages (after inflation) are flat over the past decade, for all but the top income quintile (see Wikipedia for details). Add together more people than jobs added, fewer total hours worked, flat real wages. The result: flat to down real income for most households.
This graph show results through 2007. The trend since 2007 has of course grown worse. This graph is from “Median income rose as did poverty in 2007; 2000s have been extremely weak for living standards of most households“, Jared Bernstein, Economic Policy Institute, 26 August 2008. Data is from the US Census 2007 American Community Survey.
(2) Some implications
In one sense, unknown. 1999 was a good year. 2009 is a bad year. Perhaps this is just a cycle, peak to trough — and soon the economy might begin a new boom.
For reasons discussed elsewhere (see the posts at the end), that shiny outcome seems unlikely. If so, that’s unfortunate Soon the boomers begin retiring in large numbers. This recession might have started this earlier than expected, as many people fired in their late 50’s are de facto retired.
The past decade was our opportunity to prepare. Instead we continued our orgy of borrowing, weakening our economic foundations instead of strengthening them. This muted the impact of our lost decade, much as an alcoholic dulls the pain with booze.
So we will confront the next phase of the age wave with massive household and government debt, which greatly narrows our options. The next decade or so might be the greatest challenge yet for the American republic. Perhaps even greater than the Civil War, albeit a different kind of stress. Despite the doomster’s certainties, nothing we face cannot be surmounted.
We need to hang together and act wisely. We’re done so in the past, and can do so again. But the clock is running. Time is not on our side.
(3a) Afterword
For information about this site see the About page, at the top of the right-side menu bar.
Please share your comments by posting below. Per the FM site’s Comment Policy, please make them brief (250 word max), civil and relevant to this post. Or email me at fabmaximus at hotmail dot com (note the spam-protected spelling).
Important: please state the author and site of links you post in the comments, so that people see the source of your information without having to click through.
(3b) For more information about this topic
To see all posts about the new era now being born:
- About America – how can we reform it?
- About the Financial crisis – what’s happening? how will this end?
- About the End of the post-WWII geopolitical regime
Forecasts about the future of America:
- We have been warned. Death of the post-WWII geopolitical regime, Chapter II, 28 November 2007 — A long list of the warnings we have ignored, from individual experts and major financial institutions (links included).
- Death of the post-WWII geopolitical regime, III – death by debt, 8 January 2008 – Origins of the long economic expansion from 1982 to 2006; why the down cycle will be so severe.
- Is America’s decline inevitable? No., 21 January 2008
- Geopolitical implications of the current economic downturn, 24 January 2008 – How will this recession end? With re-balancing of the global economy — and a decline of the US dollar so that the US goods and services are again competitive. No more trade deficit, and we can pay our debts.
- A happy ending to the current economic recession, 12 February 2008 – The political actions which might end this downturn, and their long-term implications.
- The US economy at Defcon 2, 11 March 2008 — Pretty self-explanatory. Where are we in the downcycle? What might the world look like when it ends?
- What will America look like after this recession?, 18 March 2008 – More forecasts. The recession might change so many things, from the distribution of wealth within the US to the ranking of global powers.
- Another warning from our leaders, which we will ignore, 4 June 2008 — An extraordinarily clear warning from a senior officer of the Federal Reserve.
- Big changes loom before us; why are they invisible to most experts?, 29 July 2008
- A look at one page of what lies ahead in America’s history, 7 August 2008
- Can you see the signs of spring in the coming of winter? A note about the recession., 10 September 2008
- Effective treatment for this crisis will come with “The Master Settlement of 2009″, 5 October 2008
- A look at out future, 2009 – 2010 … and beyond, 9 November 2008
- Some thoughts about the economy of mid-21st century America, 12 January 2009
- A nickel summary about the state of the world (the geopolitical big picture), 11 February 2009
- The future, always in motion and so difficult to see, 18 March 2009
- America on its way from superpower to banana republic, 28 March 2009
- Beginning of the end of the Republic’s solvency. Soon come the first steps to a reformed regime – or a new regime., 14 August 2009
In fact, it’s worse than that. We didn’t just spend the last decade doing nothing — we spend the last decade actively degrading America’s ability to generate new jobs courtesy of the massive anti-science anti-basic-research mindset of foam-finger-hoisting “GO AMERICA! #1!” crowd who cheer themselves hoarse for torture and war and more military funding, but decry even the most minimal funding for basic scientific research as “pie in the sky stuff.” These are the people who ridicule volcano monitoring…but love torture. These are the people who make fun of congressional funding for “kooky” stuff like particle physics and go out of their way to kill projects like the Superconducting Supercollider…but adore endless lost foreign wars in third-world hellholes.
The rest of the world invests in medical research and particle physics research (CERN) and basic science.
America invests in new technologies for torture and new technologies for genocide. Link to America’s new torture technology, the wonderful microwave pain ray. America doesn’t have enough money to fix its crumbling roads and collapsing bridges and deteriorating water mains and 70-year-old sewers, but we have all the money in the world to invent new types of torture devices.
If you want to the world’s best medical technology or the world’s best internet technology or the world’s best cellphone technology or the world’s best robotics technology or the world’s best stem cell research, better go to Europe or Japan or South Korea or China. But if you want the world’s best technology for torturing people, why, America’s your place!
Decade? I can’t see anything wrong with America today that wasn’t pointed out very clearly by Jimmy Carter in 1979.
As for fixing it, first you’d have to get a supermajority of the American population to agree on what the problems were. Actually no, first you’d have to get the majority of the American population and it’s government to start living in the same reality. It’s beyond me how that can happen.
bloomberg’s chart of the day shows the lost US decade in comparison to the two Japanese lost decades.
.
.
Fabius Maximus replies: No stock market chatter here, please. Also, this is one of the dumbest examples of chart junk I’ve seen. No economically similar starting points, nor are the two series indexed.
FM: “We need to hang together and act wisely.”
Alternatively, each of us – as individuals – should seek to distance ourselves from the sort fools who have been so improvident lately.
BTW: Who is this “we”? FM obviously means the collective citizenry of the USA, but is that the best definition? How about family? friends? neighbors? co-religionists? all of humanity? some other term?
.
.
Fabius Maximus replies: If the US goes does (in some sense), all Americans will suffer.
As for the “sort of fools” you refer to, much of this has been driven by national economic policy. So the fools are the folks who voted — and voted and voted — to put these people in office.
FM, in spite of your sober analysis of past decades, in my opinion you are overly optimistic in evaluation of current situation. For example Inflation or Deflation? Nobody knows what path will we take. Excerpt:
Here you presume that even in that dire situation, government may choose the desirable outcome of its policy. I.e. inflation or … or what? Deflation? Maintainable inflation?
Anyway, there are some evidence that not in some distant future but right now US government is already betting on monetization of debt.
See The Shell Game – How the Federal Reserve is Monetizing Debt, Chris Martenson, 25 August 2009. Excerpt:
And The Fed Buys Last Week’s Treasury Notes
.
.
Fabius Maximus replies: This excerpt makes little sense to me. Prices can move in opposite directions in different monetary systems without causing problems. For example, this is one way to adjust for different levels of growth. A currency crisis is an external event, and contributes (as do many other factors) to monetary changes (which are described as inflation or deflation).
Second, the statistics show that the Fed is no longer printing money on a large scale. See pages 3-6 of the weekly St Louis Fed report.
Third, none of the things you mention are Armageddon. The only worrisome thing I see he is your panic.
FM replies: “This excerpt makes little sense to me.”
Maybe that excerpt has not enough sense without context. I strongly recommend you to read this articles, anyway.
I remember during the “Feed the World” era that it was ‘as plain as day’ that Ethiopia actually had all the food and land it needed to support itself, but that a small minority of armed factions were deliberately hoarding all the food and materials, leaving thousands to die. We civilized americans and europeans were appalled that such a thing could happen.
Your mention that this decade has sucked for everyone except for the top quintile makes me wonder, and perhaps want to scream a little.
FM: “many people fired in their late 50’s are de facto retired.”
Good point. This phenomenon probably extends younger to the early 50s or even late 40s. Makes me question the advice given to laid-off middle-aged people to go to school. What is a 57 year old with a freshly-minted university degree going to do? Most likely face age discrimination in the job market. So they are worse of than they were before. Not only are they still out of work, but they have also shot resources – time, effort and money – down a drain.
bummer
.
.
Fabius Maximus replies: Agreed. I cannot sum this up any better!