Malaise: it has struck again, that distinctive American reaction to the vicissitudes of the business cycle. The current recession, although longer than most, is not especially severe by most statistical measures; unemployment averaged only 6.7 percent through November of last year, compared with just over 9.5 percent in both 1982 and 1983. (It hit 25 percent during the Great Depression.) But behind that figure is the mildly shocking statistic that an estimated 25 million Americans-20 percent of the work force-were jobless at some point in 1991.
Bad news seemed to come in unusually large chunks and with an unaccustomed finality. Zale, the big jewelry retailer, would close 400 stores; IBM would cut 20,000 jobs; General Motors planned to dismiss, apparently permanently, more than 70,000 workers in plants and offices around the country. “In the past, people have been laid off with the caveat that they would be working again when orders picked up,” says Donald Ratajczak, director of economic forecasting at Georgia State University. “It’s very different now when the entire plant is shut down for good.” Consumer confidence stood at less than half the level of 1985. In Pawtucket, R.I., Mayor Robert Metivier, campaigning door to door last fall, found himself having to try to talk voters out of leaving town. Only where would they go? Surely not to Manhattan, which in just a few years has lost virtually all the jobs it gained in the 1980s. Texas? Rice University sociologist Stephen Klineberg’s polls of popular opinion in Houston showed even a year ago that 57 percent expected “more difficult times” over the next few years, while only 39 percent were optimistic. California? For the first time in its history, more people in their 30s and early 40s left the Golden State last fiscal year than moved there from other states.
So it’s only logical for people to feel bad. On the other hand, it’s crazy. This is occurring at the precise moment that America’s great historic rival has literally disappeared from the map, taking with it the threat of nuclear holocaust that loomed so large in the boom years of the mid ’80s. On the evidence, it would seem that “consumer confidence” bears an inverse relationship to the prospect of human survival, which is ridiculous even by the standards of economics. America’s armed forces proved it can still win wars, something that had been in doubt for 20 years. George Bush, a hero when the war ended less than a year ago, is now taking the blame for the recession. Like other presidents before him, he feels burdened by the American consumer’s unpredictable, intractable nature. The administration is “one step away from blaming everything on the people, just like Carter,” says former Carter White House adviser Greg Schneiders. “I’ve noticed that once a president fires his chief of staff, the next step is to blame the American people.”
Actually, it’s possible to have some sympathy with Bush’s predicament, whatever one thinks of his specific performance. True, apart from the symbolism of turning his Asia trip into a campaign for “jobs, jobs, jobs,” he hasn’t taken much action, and action was what the people seemed to want. “In the focus groups you hear that all the time,” said Paul Tully, political director of the Democratic National Committee. “Where is the George Bush of Desert Storm? Where is the guy who led?” But this begs the questions of what specific actions would help, and even which problems need to be addressed. The recession has led to a decline in real-estate values, with the result that many people who bought homes in the last half of the 1980s have lost much of their equity. But only a few years ago people were outraged because house prices were so high that young families couldn’t afford them. It is impossible for “values” to be high and “prices” low for the same thing, but Americans seem to want it, along with paying low interest rates on mortgages and getting high ones on bank accounts. More generally, they want all the benefits of a free-market economy without the risk. When a Russian loses his job in an inefficient state factory, Americans chalk it up to the “discipline of the market.” When the same thing happens to an American in an inefficient private airline, it’s regarded as a national failure.
Obviously, gloom is a matter of relative perception. Laurence Stybel, a Boston businessman, points to a paradigm shift in cocktail-party chatter. People assume that his business, a national “outplacement” firm for laid-off executives, is doing well in the recession, and when he confirms that business, in fact, is good, they often confide that they’re doing well, too. “It’s almost an admission,” he says. “In the ’80s, you’d be ashamed to say you weren’t doing well. Now, the cocktail-party talk is that everything’s terrible. People are ashamed to say, ‘Gee, things are going pretty well for me’.” For his part, Stybel believes that the recession is front-page news in part because it has struck particularly hard at advertising, an industry with a special place in the heart of newspaper editors. (Also restaurants: the number of restaurants that closed last year was up 54 percent from 1990.) “Because some of the major communicators in the country are concerned about their own employment, we’re hearing about it more.”
Of course, it’s much too cynical to suggest that journalists worry only about their own jobs; they care about those of their spouses and friends as well. Many of them are probably lawyers. Hundreds were laid off just in New York last year, a shocking development in a city that is to lawsuits what Pittsburgh once was to steel. Proportionately, many more blue-collar workers are unemployed. But relative to expectations, for even one lawyer to go to bed hungry in America is a national disgrace.
Not to mention bankers. “The newspaper says the banking industry will lose 100,000 jobs this year,” says Paul Hirsch, a professor of “strategy and organization” at Northwestern University’s business school. “That’s 100,000 middle-class people who thought they were going to be in control of their lives. Manhattan is filled with 40-year-olds out of work, deep in debt and overextended on their apartments. They never thought it would happen to them. " People who had worked their way up to the exalted level of “partner” in their chosen professions discovered that not even that made them immune to layoffs. KPMG Peat Marwick, one of the nation’s largest accounting firms, engineered the “resignations” of 260 partners last year, explaining that different skills will be needed from now on. Of course, laid-off accountants start with one advantage in the new job market: they know how to make change.
All this has contributed to what psychiatrist Robert Conroy, director of the Menninger Management Institute in Topeka, Kans., calls a case of “national anxiety.” It is a disease triggered not by bad economic news as such, but by uncertainty and lack of direction. Some of this is specific to the current situation. It was unsettling that more than 150,000 Rhode Islanders had their savings frozen by a credit-union collapse. Some 70,000 GM workers will lose their jobs, but since the company hasn’t decided which plants to close, practically all 390,000 North American employees feel vulnerable.
But there also appear to be deeper structural changes at work. Different disciplines are struggling to metaphorize our predicament. Stan Schultz, a social historian at the University of Wisconsin, refers to an “ephemeral economy” or a “one-year-warranty society,” a nation obsessed with the consumption of cheap consumer goods. “I don’t think people study the economic indicators and decide they ought to be gloomy,” he says. “We bring home the paycheck, pay the bills and realize that we can’t buy as many goodies. Given that we’ve come to view the acquisition of goodies as the purpose of life, we conclude that things are terrible.” Economists sometimes refer to a “new-age economy, " one that sacrifices productive investment for nontangible social benefits, such as old-age pensions, health care and environmental protection. Healthcare spending by business and government accounted for 13 percent of total U.S. output last year. These are desirable ends, but Americans must realize that they have a cost: a slower rate of economic growth and diminished competitiveness (at least until the consumers in the countries we compete with start to demand the same things).
At the same time, Americans seem to be losing faith in the government’s ability to address these problems. The government did nothing to avert the S&L crisis, merely showed up afterward with a mop and bucket, and handed them to the taxpayers to clean up the mess. “There’s a sense among many Americans that our options are limited,” says Richard T. Curtin, director of Consumer Surveys at the University of Michigan’s Institute for Social Research. “Not only don’t we have effective leadership, but we lack the tools to change anything. " More or less the same thing was found in a recent poll of business executives by the U.S. Chamber of Commerce, according to chief economist Lawrence Hunter. “An overwhelming majority of businesses say that anything that government will do-about the economy, slow productivity growth, the environment-anything it will do will be the wrong thing.”
These are serious issues indeed, and it is only natural and healthy for Americans to be concerned. But it does not follow that the historic triumph of Western democracy over totalitarianism is somehow rendered meaningless because we can’t keep every sawmill and haberdashery in the country open forever. Hirsch, who recently returned from Czechoslovakia, says out-of-work Americans should be grateful that they’re not trying to rebuild their lives in a country where full employment has been a government-given right rather than a goal. Now, with East European governments in disarray, individuals have no idea how to function. “Americans are good at rebounding,” he says. “Not everyone is so fortunate. People will get through this.” One way or another, the system will see us through. It has to: it’s the only one still running.
Money woes have caused the nation’s worst bouts of gloom. But even in times of plenty, unrest at home and abroad has shaken U.S. confidence:
Ten years of broad lines, hunger riots and miserly government “relief.” America’s mood was never blacker. At its worst, in 16 million were jobless.
Losses in early 1942-Bataan, Corregidor-made the outlook for a quick victory bleak. Families faced hardships: everything from gas to cooking oil was rationed.
With the Soviet Union’s shocking 1957 sputnik launch, U.S. postwar self-satisfaction gave way to self-doubt. Suddenly, it seemed, we were losing ground to the Soviets.
Though the ’60s were boom years, war protests, race riots and assassinations made many believe that American society was crumbling. Richard Nixon’s election was followed by a recession, then high inflation. The humbling remedy: a devalued dollar and a series of wage and price freezes.
The 1973 OPEC embargo quadrupled oil prices in a year and led to inflation and a U.S. energy scare. Gerald Ford’s lame ‘Whip Inflation Now” campaign and the recession of 1974-75 deepened cynicism fostered by Watergate.
The 1978 oil shock and the Iran hostage crisis stung, but U.S. optimism-and Jimmy Carter-were dealt the hardest blow by inflation in a stagnant economy. Carter’s tight money policy didn’t curb 13.5% inflation. At the same time, 7.8% were unemployed.
In 1981, white-collar America sniffed luxury with Reagan’s tax cuts. But blue-collar workers-many in the rust belt–felt the worst recession since 1929. In December 1982, almost 11 million were jobless.
Photo: Depression bread line, 1935 (LASS-ARCHIVE PHOTOS)
Photo: Marines evacuate Hue, 1968 (JOHN OLSON)
Photo: 1985 farm-foreclosure sale in Iowa (MAX WINTER-PICTURE GROUP)
Despite the bleak mood of the public, America’s economic picture is not unremittingly grim. The stock market and discount stores are among the bright spots:
The Dow Jones industrial average surged 203 percent in 1991, and has risen 287.12 points in the rally that began Dec. 20:
November sales were up 5.7 percent from a year earlier. Realtors expect the spike to continue.
The trade deficit shrank in October, virtually ensuring 1991 will have the smallest gap in eight years.
Though most retailers didn’t fare so well, Toys “R” Us enjoyed an “outstanding Christmas season” with same-store sales up 73 percent over 1990. The Gap, Wal-Mart and K mart also posted strong increases.
The consumer price index grew at an annual rate of only 2.9 percent in 1991, compared with a 6.4 percent increase in 1990.
