Let's talk depression...

Knoxville-Horn

Knoxville-Horn

1,000+ Posts
Not the mental aspect, the financial one.

I'm curious as to how a true depression might affect our modern lives. Obviously, I'm far too young to have experienced anything other than a mild recession -- therefore, I'm kind of getting nervous about the possible collapse of the economy.

Any insight will be appreciated. Rather than type this up succinctly and orderly, I'm just going to throw some statements and questions out there.

I have a pretty good knowledge of history; a working knowledge of economics but have NO idea how a depression might affect the average modern family.

One thing that confuses me is how much our standard of living could be affected. Would we be talking about a large loss of amenities and conveniences or is there actually a danger of people starving? It seems to me that most Americans had a pretty meager standard of living at the onset of the last depression. How much of the things we see in history books or through the spoken word was a result of the depression and how much of it was a result of the fact that most people didn't have much to begin with?

My wife and I have been living pretty basically for several years now as we put her through undergrad and then grad school. I am currently in my 3rd year of a 4-year program to get my teaching degree. We don't and haven't spent much since we got married in '02. That - combined with the fact that she is a teacher with a Master's and I will be a teacher in 2 years leads me to believe that we should be able to ride out a recession pretty easily. It's the depression and starving that has been keeping me up lately.

We obviously don't have anything to lose in the stock market as her 401-K is only a year old. Also, government jobs - especially teachers - are extremely hard to lose in the case of high unemployment.

Does anyone have any insight into my post? Am I being paranoid? Are there any steps that my family and I should be taking at this point? Thanks in advance.
 
Well, in all fairness, I wasn't predicting a depression. And, yes, I do know that the only thing that gets more hysterical than my mom is the media. I was just wondering what the repurcussions would be for the average American...just in case.
 
it's hard to say. i'm 33 and i've never been through a really hard recession either. obviously during economic downturns people cut back on luxury goods and what not and "luxury" is different for economic classes.

some cut back on vacations
some cut back on eating out
some have to send both parents to work
some might lose their job and have no option but to take lower salary jobs

this is going to sound ****** but i live in fort worth and you'd never know the rest of the country is worried. there is barnett shale $ here and the price of homes is anything but going down in my neighborhood.
 
Actually, teacher usually make out better than average in recessions, although there has not been major depression since segragation so there is no historical example in that case. But, if you think it through, public education is not largely affected by recessions.

In Texas, most of public education is paid for by property taxes. Due to the nature of the property tax. It takes more than 3 years for the tax revenue to actually fall (1 year to apraise, 1 year to assess, 1 year to collect). But, since its pretty obviousl which way the revenues are going, school district should be able to accurately forcast at least two years ahead (not counting Dallas ISD of course). Since they should be able to do that, they have very few reasons to actually lay off teachers. Hiring freezes may become the norm, but not actual layoffs.

Also, since benefits and pay are often dictated by state legislators, they are almost never cut since they would like to be re-elected.

Finally, during economic downturns, more people believe that education is the best way out of it. Whether it going back to school or becoming more involved with your children's education, it happens much more frequently during recession than it does during economic growth.

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"some cut back"

Many won't have any choice but to cut back as easy credit is going away.
 
"A recession is when your neighbor loses his job. A depression is when you lose your job."

That's an old saying but I think what it means is that a whole lot of people will be out of work if there is a depression.
 
I actually think it is a great thing for the average American, and for the world that easy credit is going to go away. I just hope that is the case. I am really disturbed by middle class people that I know who throw away (this is an estimate) one third to one half of their income on interest. They figure that if they can afford the payments (no matter the interest rates) then they can afford the item. This is not a good thing.
 
Yeah-- The best thing anyone can do looking at our economy is get out of debt. Sell your car, downsize, etc, while you still can.
 
Probably the worst part of a major depression is if you lose your job (highly likely) the chance of finding another one is not going to be good. When you do find something, rest assured it will not pay what you are expecting or what you think you need to make.

There is a reason that for many generations people built modest 1,000 sq ft homes, did not travel much, had few luxuries, etc. I fear most of our young people and a great deal of total population may be experiencing a serious downgrade in their standard of living sooner than later.

Some people will thrive and do even better than they are now. Not many but a few will.

I am not sure how the Teaching Profession will be affected but in a depression most people will not be able to pay the exuberant property taxes we pay today. The State Coffers will be as empty as the average families bank account.

There is no upside and it will hurt everyone. In modern America it will hurt a lot.
 
Of course it is yet to be seen exactly how the employment rate will be effected by the latest economic climate, but so far we still have pretty low unemployment. Actually, I would say we have really low unemployment given the circumstances. Of course, at least as I understand it, unemployment is also a bit of a lag indicator and not a leading indicator, so we are not yet near the highest level of unemployment we will see. I just think the jury is still out on exactly how high the unemployment will go.
 
Think early 80s recession not Great Depression. Unlikely to see more than 10% unemployment as we have very few manufacturing jobs anymore.
 
that is a great point that you bring up Hayden. During the great depression EVERY area of business was hit, as well as agriculture. While the current crisis is bad, it is not affecting all areas of business. Now, the banking industry WILL have a wide spread effect, but it won't be the collapse of industry after industry.
 
If hardtimes hit, I predict that the upper Texas coast will see a dramatic increase in population growth.
 
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