The Depression is Here -- It's Just Invisible

The Great Depression that Federal Reserve Chairman Ben Bernanke claims to have averted has been part of the background radiation of our economy since at least 2008.

It's just that, like radiation, it's invisible.

We've called it the recovery, the jobless recovery, the slogging recovery and more recently the fading recovery. We've measured modest growth in our nation's gross domestic product to record that our so-called Great Recession ended in June 2009. And now we are saying that if this disappointing growth suddenly disappears, as currently feared, we will be in a new recession.

There is nothing more depressing than hearing about a new recession when you haven't fully recovered from the last one. I take heart in suspecting that in a still-distant future, historians will look back with clarity and call this whole rotten period a depression.

The precise definition of a depression, of course, remains as debatable as anything else in the field of economics. By some definitions, it is a long-term slump in economic activity, often characterized by unusually high unemployment, a banking crisis, a sovereign-debt crisis, surprising bankruptcies and other horrible symptoms we can find in the headlines almost every day.

It is easy to avoid seeing all of these events as constituting a depression if you somehow have kept your livelihood intact all this time. But it's important to remember that not everyone has to stand in a bread line during a depression.

Nearly one out of seven Americans receives food stamps, according to the U.S. Department of Agriculture. That's more than 44 million people. If they all stood in a line and someone photographed them using black-and-white film, they easily could be mistaken for people from the 1930s. Instead, they go to a grocery store and spend their credits like money. There isn't even a social stigma to make them stand out as any more glum or destitute than anybody else.

Last week, the Associated Press reported that America's official poverty rate likely has hit levels not seen since the 1960s. Surveying several economists and academicians, the wire service predicted the poverty rate would come in as high as 15.7% when the Census Bureau releases it in September. That would wipe out all the gains of President Lyndon Johnson's War on Poverty.

Poverty is another word for joblessness, and our economy hasn't been generating enough decent-paying jobs for many years. Globalization, technology, outsourcing, immigration and the schemes of financiers have taken their toll. No one is certain when jobs will come back, and many of the jobs that remain don't pay anywhere near what, say, your average failing CEO gets paid.

"Half the jobs in the nation pay less than $34,000 a year," noted Peter Edelman, author of "So Rich, So Poor: Why It's So Hard to End Poverty in America" in a recent New York Times piece. "We've been drowning in a flood of low-wage jobs for the last 40 years."

If you don't want to call this epidemic of rising poverty an invisible depression, call it the golden age of unemployment. Today's laid-off workers can collect unemployment benefits for up to 99 weeks, staying off the public's radar as an economic distress signal. Over that time, they often lose confidence, their skills degrade, and they can slip into the ranks of America's chronically unemployed--where they no longer will be counted in the nation's official unemployment rate, now at 8.2%.

What are the societal effects of millions of people sidelined for so many years on end? College graduates, looking to launch careers, end up working at Starbucks. Middle-aged professionals apply to temp agencies for gigs they once considered beneath themselves. The nearly retired simply retire early. Even if we could return to full employment tomorrow, the drag of all these idled lives could affect generations.

As the economy reels, the national debt approaches $16 trillion, and we hear fears of Congress jumping off a fiscal cliff by year-end. Many states and local governments are struggling with massive deficits, too. Three California cities have filed bankruptcies.

U.S. companies are warning of slower growth amid Europe's meltdown, yet the Dow Jones Industrial Average has crossed the 13000 mark, and some observers are predicting new highs for the index soon.

The rising stock market is as counterintuitive as interest rates falling to new lows after the U.S. lost its triple-A debt rating last year. It isn't that investors aren't wary. It's just that every place else makes them more wary. This isn't the definition of a recovery.

The real estate market also seems to be doing a good job of masking the true condition of the economy. Overwhelmed banks are slow to foreclose on homes, sometimes letting borrowers live in their homes without payments for more than a year. The result is a shadow inventory of homes nobody can count accurately. On the commercial real estate side, banks and investment trusts are slow to take markdowns, too. The shiny, new stuff may still sell. But the old stuff sports "For Lease" signs.

The cure for our battered economy has been to allow our disasters to occur more slowly through taxpayer bailouts and extraordinary interventions from the Fed. So far, this strategy has worked. We have averted a sudden crash in favor of a depressingly slower one. At least if you don't look, you may not have to see it.

(Al's Emporium, written by Dow Jones Newswires columnist Al Lewis, offers commentary and analysis on a wide range of business subjects through an unconventional perspective. Contact Al at or