How Bad Is the U.S. Economy?

There is a campaign afoot by a conservative minority to downplay the state of the U.S. economy. The U.S. economy not so bad? It’s a tough sell, but this fragment is nevertheless trying to sell it.

And since a new president is now talking about our economy frankly, i.e., that the economy is indeed in dire straits, this conservative minority is not only downplaying the seriousness of our economic situation but is now denigrating the new president in order to do so.

Look at Bradley Schiller’s outlandish Feb. 13, 2009 Wall Street Journal column as a case in point. The column’s title? “Obama’s Rhetoric Is the Real ‘Catastrophe.’”

Schiller begins with the ludicrous statement that “Obama has turned fearmongering into an art form” because Obama mentions today’s economic crisis and “Great Depression” in the same sentence. Forget the rhetoric of other administrations in recent years—“Axis of Evil,” “Saddam is training al-Qaeda,” “Iraq is a nuclear threat”¹—because “Great Depression” is worse . . . but that’s a different column. And forget that economists, CEOs, and regular Americans across the board compared the crisis to the Great Depression long before Obama.²

Besides peddling ridiculous claims, Schiller’s main point seems to be that unemployment is the criterion for a declining economy, and since the unemployment rate in the 1930s peaked at about 25% compared to today’s 7.6% and 1982’s 10.8%, 2009 doesn’t compare to 1930. . . .

What Schiller doesn't mention is today’s mortgage crisis, the financial system collapse (about one-fourth of our GDP) and multibillion-dollar bailout, the $10 trillion national debt,^{3, 4} the decline of the U.S. dollar against the Euro, the high price of oil as the dollar declines, the war in Iraq and the newly expanded war in Afghanistan.

As noted above, Schiller likes to quote the year 1982, a year which he thinks was a little bit worse than today. For fun, let’s give him that:

OK, let’s say today’s crisis is nearly tied with the 1981–82 crisis for second-worst-economy-ever after the Great Depression. Even if we concede that, so what? What has Schiller proven? That the economy is very close to being as bad as it was 30 years ago? And that the economy is approaching with no signs of letting up its level during the Depression nearly 80 years ago? Therefore, there's nothing to worry about and no need to make any changes to the current system?

Are our standards for progress so low?

So how bad is the U.S. economy? The important thing is that it’s bad enough that something needs to be done about it.

Be on the lookout for similar claims from the conservative minority that Obama is mongering economic fear. What's the purpose of Schiller and Co.'s bombastic rhetoric? Well, besides simply trying to garner attention (i.e. higher ratings which lead to fatter paychecks) for themselves and endearing themselves further to the Republicans who perhaps give them their paychecks, one purpose is to try to counter Obama's economic recovery plans, plans that might curb the kind of reckless trading and borrowing that has concentrated U.S. wealth and that has devastated the U.S. economy, bringing it close to, yes, another Great Depression.

But why, you may ask, would they want to do that? Do they want our economy to continue to suffer? I'll offer some answers to those questions in my next post. Stay tuned.


[1] For more rhetoric from the last decade or so that aimed to monger fear, see The Center for American Progress, “Claims and Facts: Rhetoric, Reality and the War in Iraq.”

[2] No citation necessary. But for fun, see economist Mark Gertler quoted in “Worst Crisis Since ’30s, With No End Yet in Sight,” The Wall Street Journal, Sept. 18, 2008. Also see economist Paul Krugman, “Fighting Off Depression,” The New York Times, Jan. 4, 2009.

[3] See our Jan. 13, 2009 post “Tired of Paying to Continue Being Poor” for info on the 10 trillion national debt.

[4] In the U.S. “[b]y 2007 total indebtedness was three times the size of the gross domestic product, a ratio that surpassed the record set in the years of the Great Depression” (Barry Gewen, “What Ails the American Economy? Everything, and There’s Worse to Come.” Rev. of Bad Money: Reckless Finance, Failed Politics, and the Global Crisis of American Capitalism, by Kevin Phillips. The New York Times, Apr. 21, 2008).

Tip: You might be eligible for unemployment

Briefly, Unemployment Insurance (UI) is a federal program that requires each state to administer unemployment benefits in some fashion. And it’s the employers who pay into the federal and state UI systems through taxes, not you. Most states run their UI programs a bit differently, so your eligibility for UI benefits depends on the state you work in.

So, most everyone knows that if you get laid off from your full-time job then you’re probably eligible to collect these unemployment benefits.

But other circumstances could merit you unemployment benefits as well. For instance, you might qualify for unemployment if you:

• Worked part-time and got laid off;

• Worked under temporary contract and that contract expired;

• Worked for a term-of-project (TOP) and that project expired;

• Are still working but your hours have been drastically reduced (sometimes called WorkSharing, this program is offered in 18 states);^{1, 2} or

• Were fired for poor performance as opposed to a violation or misconduct.

Notice I use the word might above, because all states have different regulations and you need to check your state’s rules before filing a claim. You can find your state’s UI program and contact info easily with CareerOneStop’s locater map.

Some states specifically exclude coverage for certain types of work. The U.S. Department of Labor’s 2008 “Comparison of State Unemployment Insurance Laws” can be a helpful for gauging this.

Finally, remember that with the economy as it is, the phone lines of your state’s UI program are going to be backed up. So before calling to file a claim you should collect some info about your last several months of employment. Make sure you check your state’s rules and have that info ready, but for general reference, here’s what the state of Massachusetts will want from you when you file:

• Your Social Security Number;

• The year you were born;

• Your home address and telephone number;

• Whether you have filed an Unemployment Insurance claim in Massachusetts or in any other state during the past 12 months;

• Your last day of employment;

• The names and addresses of all of the employers you have worked for during the 15 months prior to filing your claim and the dates you worked for each of these employers. If you are reopening a claim, be ready with the same information for the past 8 weeks;

• The reason that you are no longer working or that your hours have been reduced;

• The names, dates of birth and social security numbers for any dependent children, if you are going to apply for dependency allowance; and

• Your alien registration number if you are not a U.S. citizen;³

Oh, and if there’s not enough heartbreak in your world already, those unemployment benefits are taxable income.⁴


[1] See "Companies Implement Part-Time Layoffs," by Curt Nickisch, NPR Morning Edition, Aug. 21, 2008.

[2] See, for example, the state of Michigan's Unemployment Insurance Agency's rules for "underemployment."

[3] Quoted from the Massachusetts Executive Office of Labor and Workforce Development.

[4] See "Taxation of Unemployment Benefits," by Christine Scott, Congressional Research Service, 2005.