The question keeps coming at me. Why is everyone so gloomy? It is most often asked by people who live with numbers and who try to put a proportion on things. People like economists.
They point out, rightly so, that this recession in terms of severity is not as bad as the 1981-82 downturn, when the unemployment rate hit 10.8 percent. It is now hovering around 7 percent and, if all the predictions are right, it shouldn`t get too much worse.
I know many economists who blame us, the media, for what they regard as excessive gloom. And it is true that the print and broadcasting industries have been among the hardest hit in this recession-indeed, more so than in
`81-82. When layoffs occur right next to you, it seems as if they`re occurring everywhere.
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Roger Brinner, economist for DRI/McGraw Hill of Lexington, Mass., not only blamed the media for being too pessimistic about the state of the economy, but he also said the fact that the recession has slammed the East Coast the hardest has added to the gloom. It is where most of the influential media figures live, he said.
On a radio talk show in Boston, the moderator said it flatly to his audience: ”I don`t care what President Bush and Treasury Secretary (Nicholas) Brady say. We are in a depression.”
Michael Kennedy, an analyst for the Rand Corp. in Santa Monica, Calif., said he is puzzled by the overwhelming feeling of doom about the economy, since the numbers do not indicate to him that the nation is on the edge of an abyss.
This is not an idle question. It is felt in many quarters that exaggerated media reports of impending economic collapse are unnecessarily damaging consumer confidence, a key factor in any recovery.
A year or so ago, I thought the critics might have been on target. But now, after traveling around the United States and talking with people about the economy, I feel the media are accurately reflecting the general mood in the country.
People might be excessively gloomy, but one cannot blame them for being so. They look around and see a huge federal deficit eating up their resources. They see overbuilt real estate and banks in financial trouble. They watch as their companies give their executives big raises and cut workers off the payroll in the interest of short-term profit.
They do not see much investment by their own firms. And as they observe their managements hunkering down, they worry about their own industries and their own jobs. As they worry, they do not spend, thereby making the recession worse.
This time around, the slump has cut deeper into the white-collar ranks. Blue-collar workers are psychologically more prepared for handling layoffs, and so are their families. They understand that business is cyclical and have built protections into their contracts. But white-collar workers are more fragile. As Richard Syron, president of the Federal Reserve Bank of Boston, put it, they are devastated when they are laid off. In many cases, they feel their lives have been ruined.
But in my interviews I came across many people who knew there was something wrong about the 1980s. They knew the runup in real estate values was artificial and could not last. They knew their own companies were top-heavy with supervisors who did not have enough to do. They realized that many firms had loaded their payrolls with people in lieu of investing. People were cheaper, more disposable.
No one should downplay the importance of real estate in this recession. For millions of Americans who own their homes, the equity they`ve developed represents a significant part of their life savings. And when they see it plunge, they tend to retrench, spend less and pay down their other debts.
It is a psychological blow that economists have a difficult time grasping. But they shouldn`t if they think about it hard enough. Homeowners spend the greater part of a lifetime struggling to pay off the mortgage. It is their most valuable asset.
In this recession, I think people are way ahead of their leaders. They know this is not merely a temporary slump, but a long-term slide that will take energy and money to arrest.
Many secure, gainfully employed people have told me that, while they aren`t worried about themselves and their own jobs, they are concerned about the next generation. They are fearful because they do not see America investing in its own future.
But the gloom in the land has been successful in one respect. It finally has forced our lackadaisical political system into action. If that`s what it takes to get Washington moving, it isn`t excessive at all.