Sunday, February 15, 2009
A PSYCHOLOGICAL RECESSION
HOW LONG WILL IT LAST?
An economic recession inevitably produces psychological depression, and that, in turn, undermines our energy, hope and ability to recover. We can't help but ask ourselves, then: "How much of a psychological impact will this recession have?" But we are asking the question indirectly, afraid to stare it in the face because we don't want to know what we know the answer is likely to be.
Those whose parents and grandparents lived through the great depression of the 30's know how much they were permanently scarred by it, how they tended to live out the rest of their lives hunched over with fear. We also know that such individual traumas as the loss of a significant job or a foreclosure and eviction can be as devastating as a fire or life-threatening illness, and the numbers of those enduring such losses is growing daily. How great will the collective miasma become?
We can detect this concern now in the media discussions about how long this recession will last -- more precisely when will it end. Time here is an underlying reference to depth and darkness. The frequent analogies with Japan suggest that it could be a very long time indeed. Their banks were "dead" for ten years , and now their gross domestic product has declined at an annual rate of 12.7 percent.
In today's New York Times (Friday, February 20th), Paul Krugman quoted from the minutes of the Federal Reserve, suggesting that some believe "more than five to six years would be needed for the economy to converge to a longer-run path characterized by sustainable rates . . . of growth . . . unemployment and an appropriate rate of inflation." He had to go back to the Panic of 1873 to find an historical analogy, a depression that lasted five years, followed shortly by another that lasted an additional three. (www.nytimes.com/2009/02/20/opinion/20krugman.html?_r=2)
David Carr's column in last Monday's New York Times not only highlights the pessimism of some experts but the extraordinary reluctance of journalists to hear what they have to say. Carr cites last week's discussion on "Power Lunch" with Nouriel Roubini, the Stern School professor who has come to be known as Dr. Doom, and Nassim Taleb, author of "The Black Swan." If you know their work, you may not be surprised at their pessimistic view of the economy. What is surprising and disturbing is how consistently the panel wanted to steer away from their message. Asked to offer any sign that the economy was turning the corner, they demurred. As Carr put it, they "did not play ball." It was too depressing for journalists, Carr noted, but too depressing for the public as well. (www.nytimes.com/2009/02/16/business/media//16carr.html)
In recent years we have come to appreciate that the cost of war inevitably includes the penalty of Post Traumatic Stress Disorder, an inescapable consequence of exposing our soldiers to battle. And sometimes it does not show up until much later. A financial setback is not a trauma in the same sense, and yet it comes with its own emotional cost of discouragement if not hopelessness, fear and withdrawal, avoidance of risk and circumscribed ambition -- and it can take years to recover from such symptoms, if indeed recovery ever comes to all.