“This spring’s college graduates are entering the worst job market in 20 years.” A brief Robert Reich op-ed in today’s Times begins with this line. I read it over breakfast and it took me back…
…Because I graduated from college in 1981 and was looking for a job in 1982 — precisely the previous “worst job market” Reich is referring to, 20 years ago. It was the long Reagan recession — a painful, protracted period in U.S. economic history that is largely forgotten today thanks to the rosy hues the Gipper era has inexplicably assumed in the collective memory.
I have a file somewhere of rejection letters from publications I sought employment with — more than one of which along the lines of, “Gee, thanks, kid, you look pretty qualified, but I’m sorry to tell you we just published our last issue.” I ended up tightening my belt and freelancing for a year and a half before finally landing a regular freelance gig at the Boston Phoenix that gradually evolved into steady employment.
Now we’re stuck in another stubborn, graduation-blighting recession. The economics pros refuse to label it as such — supposedly, this recession ended over a year ago — but it sure feels like one to everyone I talk to.
And the important question right now is whether this recession will finally, as Reagan’s did, give way to economic growth and the semblance of prosperity — or whether this is a different kind of beast altogether.
The optimists have the following arguments in their favor: The economy is inherently cyclical, and sooner or later — well, by now, “later” is the only possibility — this downturn must end. And the Fed’s low interest rate policy and the Bush tax cuts (whatever their long-term cost in deficits and Social Security insecurity) provide plenty of anti-recession firepower. Just as the pain of the early ’80s preceded a rest-of-the-decade boom — and, for that matter, the pain of the early ’90s did the same — so we too can expect the sun to start shining any day now.
The pessimists survey the scene and point out that our situation today is inherently different from previous cyclical downturns. In the past, we’ve started with an inflationary trend; the Fed tightened interest rates, plunging the economy into recession but laying the groundwork for new growth as companies learned to do more with less. Today, inflation is dead, interest rates are rock-bottom and the economy is still stalled. The Fed worries about deflation, a threat unknown since the 1930s. And the very fact that nobody is sure what’s going on has a further dampening effect. Meanwhile, the Bush administration’s muddled “Cut taxes now, let our kids pick up the tab” approach is not instilling confidence in business or consumers.
A pessimist, then, views the present economy not as a repeat of the early-’80s or early-’90s style business cycle but as something more akin to the mid-’70s “stagflation” — an anomalous era when we suffered from both inflation and recession at the same time (something that economics orthodoxy insisted was highly unlikely but that those of us who lived through it remember quite vividly). This variety of cycle — the kind of fundamentally out-of-kilter global economy seen in the 1930s and 1970s — is not a two-to-three-year phenomenon; it’s more like a decade-long trauma.
My heart wants to be an optimist here, but my head is definitely feeling pessimistic.
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