The Color of Money
For many of us, the recession lives on
by Michelle Singletary
Washington Post Staff Writer
So it's officially over.
Technically, the recession that began in December 2007 ended in June 2009, according to the National Bureau of Economic Research (NBER). It was the longest of any downturn since World War II.
We need another yardstick to measure how bad off we are, because the one we have now isn't good enough. The recession may be declared over, but the hole we've dug is too deep to be measured only by the macroeconomic factors considered by the bureau.
Hard times are far from over for the millions of people still out of work, and those who have found jobs but at much lower wages, and those who can only find part-time employment.
The slump is not over for those who thought they could retire in the next few years. Now they find that their investments have dropped so much that they have to work longer or live on less in retirement.
It's definitely not over for the millions of people now living below the poverty line. The poverty rate in 2009 was the highest since 1994. There were 43.6 million people in poverty last year, up from 39.8 million in 2008, the Census Bureau reported recently. Last year, one in seven Americans lived in poverty. For a family of four, the poverty level was an annual household income of $22,050.
It's not over for the millions still without health insurance. The number of people lacking coverage rose from 46.3 million in 2008 to 50.7 million in 2009.
It's not over.
"Even though economists may say that the recession officially ended last year, obviously for the millions of people who are still out of work, people who have seen their home values decline, people who are struggling to pay the bills day to day, it's still very real for them," President Obama said during a town hall meeting in Washington this week.
The NBER defines a recession as a period of falling economic activity involving a number of indicators. The measured activity includes real income (wages of an individual or group adjusted for the effect of inflation on purchasing power), employment, industrial production, wholesale retail sales and real gross domestic product, which is an inflation-adjusted measure that reflects the value of all goods and services produced by an economy.
"The challenge . . . is that the hole was so deep that a lot of people out there are still hurting," Obama said. "And so the question then becomes what can we now put in place to make sure that the trend lines continue in a positive direction, as opposed to going back in the negative direction."
The question should also be: Are we accurately portraying the health of the economy and how individuals and families feel about their personal finances?
I put that very question to Wilhelmina A. Leigh, an economist and senior research associate for the Joint Center for Political and Economic Studies.
Like so many others, when Leigh heard the news that the recession ended last year, she scoffed.
"I think perhaps what is needed is to be very cynical about the whole notion of when a recession starts and when it ends," Leigh said.
It would be useful to look not just at the macroeconomic indicators but also at how people are being affected personally, Leigh added. An accurate measure of economic prosperity should factor in the poverty levels. It should consider not just the official unemployment figures but also the many people not counted in Labor Department data. The official unemployment figures don't include the underemployed and those who have stopped looking for work, Leigh said, pointing out that unemployment among African Americans has been notably high for years.
The new prosperity gauge should include those who aren't earning a living wage. Someone who works a 40-hour-a-week job and earns a living wage would be able to afford housing, food, health care, child care, transportation and other necessities of life in a given area, Leigh said. Sadly that's not the economic reality for a lot of people.
"We have some chronic economic challenges in our country," Leigh said.
We need a more sensitive point of reference to capture the fact that far too many people have been struggling mightily, some even before the official start of the recession in 2007. If we aren't realistic about the true financial health of our country, we won't find a long-term economic fix.
We can't move ahead as a nation if so many are left behind.
Readers can write to Michelle Singletary at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071. Comments and questions are welcome, but because of the volume of mail, personal responses are not always possible. Please note that comments or questions might be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.