Over One-Third of Americans Believe Nation in a Depression

Matt Towery
|
Posted: Feb 26, 2009 12:01 AM
Over One-Third of Americans Believe Nation in a Depression

You have to hand it to him. Barack Obama's speech before Congress was, from a presentation standpoint, incredibly strong. It needed to be, because what he likely did not know was that a new poll shows that 37 percent of all Americans, and nearly 50 percent of Democrats, believe the nation's economy is not in a recession, but rather a depression.

Of course one would never guess that things could be so dire after they watched Speaker Nancy Pelosi springing from her seat like a jack-in-the-box every 30 seconds during President Obama's appearance in her House chamber.

But since Nancy obviously doesn't comprehend depression -- economic or psychological -- I sought numerous definitions of an economic depression to see if people might be onto something.

There is no one conclusive definition of what constitutes a depression. However, many of the definitions included virtually every major economic hurdle we currently face, absent significant inflation or, in the alternative, deflation.

The best definition I could find was one that suggested that an economic depression is a period of severe economic slowdown in which individuals have to sell tangible assets in order to continue to stay afloat economically. Bingo. That explains the poll. It also tells us just how dangerous might be the practice of throwing trillions of dollars at this crisis.

It would not surprise me at all if a third of Americans have been forced to sell possessions, whether primary ones -- such as their homes -- or luxury items such as boats, second cars and vacation properties.

Certainly times are bad when one of the major ads for the Super Bowl was sponsored by a sleazy "we buy gold items" group using poor old Ed McMahon as their pitchman. People selling possessions to live? Well, if that's the definition, maybe there are plenty more folks who feel we are in a depression than anyone ever wanted to admit.

The problem is that for all the hype of both the stimulus proposal and the future bailouts of banks and insurance companies, the one segment of Americans who could most readily lift the economy up are the very ones who qualify for absolutely nothing in any of the legislation I've seen so far.

Let's be honest. It's great to talk about helping small business owners. But in reality, few people want the hassle of running or owning a small business unless they can make more on their own than they can working for someone else. Yet a couple that earns over $150,000 a year doesn't qualify for any tax cut; and a family that works a small business that earns more than $250,000 a year gets kicked in the teeth with tax increases once the Bush tax cuts come to an end next year.

Add to that the fact that these same people, who hardly consider themselves rich, probably did qualify for more expensive homes that then required that they take out what is deceptively called a "Jumbo" loan. Under the proposal by the president and Democratic Congress, people with such loans won't qualify for any mortgage relief whatsoever when the next round of handouts are awarded. But they will still be responsible for paying an inordinate share of the taxes that are funding all of these giveaways.

So how will the "rich" Americans, whose small businesses provide nearly half the jobs in the nation, get by? First, they will shed employees and cut down on vendors. That's already underway. Next, they will start selling off assets in order to generate income to meet their daily expenses. With no relief, and with additional tax burdens, it is conceivable that the very legislation passed to try to remove us from the "uber-recession" of our time might actually push the nation into a true depression.

Years ago I wrote about the oncoming collapse of the housing market. I learned of it from polling data. Now the same polling data may be telling us that we are in the midst of a depression whether we recognize it or not. The question is, will the medicine President Obama and Congress are prescribing cure us, or will it push the percentage of those who believe we are in a depression over the 50 percent mark?

Trust me, if we hit that 50 percent level, we will be in a depression. And we will have a new way of measuring and defining it.