"Gloom and doom" view of the economy

I encountered an essay at Counterpunch this morning that reflects my own views regarding the national economy. I'm not familiar with the author, Dave Lindorff, described as a "Philadelphia-based author and columnist." He obviously doesn't buy the "green shoots" optimism...

Yes, the rate of decline in economic activity has slowed. But that is to be expected. When an economy is going at full tilt, as the US economy was doing in early 2007, a slowdown of any significance yields huge numbers, in terms of falling production, falling factory utilization, falling car sales, or, this time around, falling housing prices.

But once you get to the same period in 2008, you’re already in a deep recession, and there really isn’t that much farther to fall...

...now new unemployment is rising by “just” 500,000 a month or so, but that’s because all the major employers have already shut down or shut down entire shifts. There are not that many people who can be laid off any more, at least in large groups. This gets painted as “the pace of layoffs is slowing” as if that’s good news, but it is the opposite...

...the oft-noted claim that the number of people collecting unemployment benefits is declining—especially the long-term unemployed. But the reason for this is not that people are finally finding jobs. It’s that unemployment benefits are being exhausted... [benefits are] lost if a person does some part-time work, and since nobody can support a family on $300 a week, many people on unemployment end up getting part-time jobs and lose their unemployment benefits...

...“independent contractors”—people like gardeners, freelance writers, lawyers, consultants, plumbers, etc.—aren’t covered by unemployment insurance. When they get laid off, they are on their own. And increasingly, the layoffs and job losses in this declining economy are falling on people in that category...

Put that together with the fact that Americans collectively have lost $14 trillion in wealth. They’ve lost invested savings, which are still down almost 20 percent from where they were a year ago... Where is the consumer spending supposed to come from that used to represent a whopping 70% of economic activity in a United States that long ago stopped making things?..

There is simply no money to rekindle the orgy of consumer spending that kept the US economy afloat for so long. People can’t even borrow if they want to. Banks are not lending, because they know that the happy talk is nonsense, and they don’t want to loan money to people and businesses that are liable to go belly up as the recession continues...

Even the happy talk story about housing sales improving is misleading. The reason it is happening is that so many homes have foreclosed that the sale of foreclosed homes by banks is now a significant part of the total housing market...

This time, we are more likely to see an “L”-shaped recession, where the economy hits bottom at some point, and then operates for years at a much lower level. That lower part of that “L” might rise slowly, but it wouldn’t rise by much. In this case, we would see continued high levels of unemployment, lower wages, and no bounce-back in personal wealth.

So if we want to make the correct policy decisions, not to mention the right political decisions and personal financial and basic life decisions, let’s cut the happy talk, and start keeping it real.

More at the link.