Obsession Over Recession Depression: Feeding the Economic HypeBeast

The talking heads in the media get all frothy and lathered up when the markets start to sputter. They put on their serious grimace as they deliver the news about declining equity markets, bubbles, inflation, consumer confidence, household debt, Walmart and gas prices. They mug for the camera against a photo montage backdrop of Wall Street traders hanging their heads, the famous bull statue on Wall Street, a gas pump price display, empty grocery shelves and people milling about on a line at some social services building. You can see it, can’t you?

This induces chatter in the public square, and suddenly talking about recessions is like talking about the weather; we all have some vague notion of what’s about to happen, but know there’s nothing we can really do about it. Sure, you can dress appropriately for the weather, just like you can tighten your belt financially. But these forces are going to do what they’re going to do. Weather. Recessions. They’re inevitable.

But there’s another similarity. Individually, it might seem like there’s fuck all you can do about it. But collectively, the choices we’ve made as a society are having an impact on the severity of these events.

Because recessions are so much a part of our lives (this is technically the eighth recession in the past 50 years), I think it’s good to understand exactly what they are. Both by the book and in practical terms to our lives. For our international community of Unf*ckers, we’re talking about U.S. recessions, but given our place in the world, the old adage that when America sneezes the world catches a cold is sadly true.

So, we’re going to begin with a quick discussion on the technical definition of downturns before we quickly drive through the past 50 years. Then, we’ll settle in for a little chat about the whys and wherefores and what-have-yous of our current predicament.

Chapter One

Recessions Defined

If you tune into the evening news, or especially the cable news business channels, there’s a lot of loose talk when it comes to recessions. And, the technical definition of one has little bearing on the financial reality of most people. By the books, recessions are actually pretty short. Typically, between 15 and 18 months. But the hangover can last for years.

For example, this is technically only my third recession of my working life, but my career started in the aftermath of the early 90’s recession. I started my career in ‘94, and it was a bit of a slog, although it heated up in a fucking hurry as the back half of the '90s started to cook. But again, by the books, I’ve technically only worked through three of them, including the most recent one during the pandemic. And, while it’s confusing, the recession that pundits fear is different from the brief but shocking downturn in the spring of 2020.

Anyway, the reason pundits play fast and loose with calling a recession is because we have an official agency responsible for marking the dates based upon historical data. So, it actually takes time for a group of markers to settle before a period can be declared an official recession. The agency is called the National Bureau of Economic Research, or NBER, and they refer to it as “business cycle dating.” Here’s how they define it:

“A recession is the period between a peak of economic activity and its subsequent trough, or lowest point. Between trough and peak, the economy is in an expansion. Expansion is the normal state of the economy; most recessions are brief. However, the time that it takes for the economy to return to its previous peak level of activity or its previous trend path may be quite extended.”

What’s fascinating about what they deem to be the most recent recession is that the period lasted only three months. February of 2020 through April of 2020. This is the confusing aspect of our current economic situation, because the NBER has already called the end of the recession that most of us are only now beginning to fear. That’s what makes this such an interesting moment in modern economic history.

While we do have quality data that dates back to the other pandemic early in the 20th Century, and much of it by the way thanks to the work of Thomas Piketty, attempting to compare our early industrial economy to today’s economy is fraught. That’s why I think the past 50 years is a more appropriate time frame, for comparison’s sake. We’re going to review the prior recessions, but the fascinating thing about today is that we have experienced so many cycles in such a compressed period of time. Boom. Bust. Catastrophe. Red hot expansion. Sudden cooling from inflation. Tremendous volatility all around. Enough to give you whiplash.

Heading into 2020, this economy was red hot. Like, unstoppable. Unemployment was at its lowest point since the post World War II boom. GDP growth had finally ticked back up, interest rates were still pressed close to zero, inflation was in check and household saving was finally beginning to increase after the protracted recovery from the financial crisis. For most of America, it was just the first time since the early 2000s that they could breathe a little easier.

On the other hand, for those at the top of the economic spectrum, it was a fucking bonanza. Money was cheap and abundant and the Wall Street robber barons were having a field day, particularly in response to the Trump-era tax cuts.

Of course, as we know now, that would all come crashing to a halt. But there’s a fascinating aspect to the immediate recovery and what happened at the very bottom of the economic ladder that we will also address toward the end of the show. But by all measures, that brief three month period was quite literally the most catastrophic period since the Great Depression. So when you hear pundits talking about the next recession, they’re projecting that we’ll have yet another within only a couple short years of the last official recession. Something that hasn’t happened since 1980.

Chapter Two

Recessions of the Modern Era

So let’s go back. After two straight decades of remarkable growth post World War II, the United States was about to settle into the modern economic era. Keynes was about to be put on the shelf. Hayek and Friedman were just getting warmed up, the postwar boost was fading and a new war in Vietnam was creating a drag on the economy. Unrest was palpable in every corner of the nation as blacks and women demanded entrance to not only civil affairs, but the new economy. Neoliberalism as we know it today would be quietly ushered in under Nixon’s cloak and would stay with us for the next 50 years… and counting.

Recession One: Tricky Dick’s Hard Luck. 1969 to 1970. 

Recession Two: Gerry Ford says “Hold my beer.”

There’s a tendency in hindsight to hang the ‘70s around Carter’s neck, forgetting that it was mostly Tricky Dick and Gerald Ford managing shit and making decisions that Carter would ultimately have to deal with. As often is the case when Republicans poop in a bag, light it on fire and leave it on the doorstep of incoming Democrats.

So, from November of ‘73 to March of ‘75, the U.S. once again dipped into recession, and deeper than before. Unemployment rose to a high of 9%, while GDP declined by 3%. This was a bad one brought on by the first oil crisis, a crisis manufactured by OPEC. The first real holy fuck moment when we realized the power of their combined concern. This put tremendous pressure on consumers, and the government was already over its skis from spending on the Vietnam War.

The next recession, by the way, isn’t until 1980; but that demonstrates how long the hangover can last, as the balance of the ‘70s remained fairly brutal. Even though the official end of the recession was formally called in ‘75, few would argue that it was over for the consumer.

Recession Three: Sorry, Jimmy. We hardly knew ya.

Poor Jimmy Carter’s term started in quicksand and ended in a pile of manure. During his last year in office, we experienced another “official” recession that lasted six months, from January to July of 1980. Double digit inflation, almost 8% unemployment, interest rates through the fucking roof and consumer confidence in the toilet. Oh, and did we mention another energy crisis? The regime change in Iran once again threw the global commodities market into disarray. Literally nothing was working. But that’s okay. Because captain cowboy hat was on his way into the White House with a promise to set everything right again in the world.

Recession Four: Welcome to Washington, Ronnie. Now go fuck yourself.

Given the sheen Republicans like to put on the Reagan years, it’s almost hard to imagine what a shit show the first few years were for the Gipper. From July of 1981 through November of 1982, we once again fell back into recession after climbing out for about ten seconds. This would cut super deep, carving 2.9% off GDP and lasting 16 months. Unemployment reached double digits as the Iranian crisis continued to bleed out and affect the global supply of oil. This is the famous period of the Volcker tourniquet, which saw the prime lending rate in the country top 20%. 20%!!! Can you fucking imagine?

Reagan had also slashed taxes and increased spending dramatically, blowing a massive hole in the federal budget without sending any relief to average Americans. In fact, he went the other way and cut federal welfare spending across the board while minting the military industrial complex with colossal sums of government contract cash. Eventually, Volcker’s shock therapy did work and inflation started to cool, but even the beginning of Reagan’s second term was pretty rocky. It took years to fully bake this sucker and prepare us to head into the ‘90s.

Recession Five: Read my lips. Here’s a recession.

This one was a bit of a self-inflicted wound by Papa Bush, who was counting on a war fever victory lap lasting a wee bit longer. But, since he decided to meddle in Middle Eastern affairs, which caused oil prices to surge, we experienced a quick but sharp decline that technically lasted about eight months, from July of 1990 to March of 1991, but was clearly much longer than that. GDP declined about 1.5% during this period and unemployment hovered around 6.8%. All told, it was a little too deep and set the table for a surprise victory over the incumbent president just a short while later. While the Clinton-era technically didn’t have a recession, the first couple of years were tight, to say the least.

So, Clinton gets a pass on a technicality. They don’t call him slick Willy for nothing. The Bush clan wasn’t as fortunate. Despite coming in with surpluses and a rocking economy, cracks were beginning to show pretty early in the George W. Bush administration. While we all know the moment that everything changed and the quick and brutal damage inflicted on the economy, the early 2000s recession actually started prior to 9/11.

Recession Six: When the world stopped turning.

Lasting from March of 2001 through November, this six month recession was punctuated by the event that forever changed the world. And that’s not hyperbole. The whole year is a blur, and events tend to meld together in our minds over time. This was just after the dot com bubble burst and in the middle of the Enron scandal as well. And, while the pain was short lived in economic terms, with only a .3% decline in GDP, this stretch of time shattered the faith of America in a way that we’ll still be unpacking for years to come.

Of course, what we do know is that our ferocious response to 9/11 continued unabated and built a new surveillance and war economy that would push the limits throughout most of Bush’s term. But a combination of bad tax policy, loosening of regulations and historic fuckery unfolding in the housing market would eventually lead us to the most protracted and difficult economic crisis since the 1930s. Leaving Bush with yet another sad legacy of bookending his two-term presidency with technical recessions.

Recession Seven: All hell breaks loose.

Technically, this spans two presidencies, but it’s extremely clear that the brunt of it can mostly be attributed to Dubya. And, again, the timing here is interesting. Most of us think back to this time and recall that it was 2008 where the damage was done. And that’s true. But the signs were there. In fact, the NBER places the official start as December of 2007. Even nuttier is that they call the end of it as June of 2009, though we know that it would take years and years for the economy to regain its full footing.

Though the peak of the decline was steeper, the period of recession itself saw a 4.3% decline in GDP, and the nation hit a peak unemployment rate of 10%. We all know the story by now. The housing bubble burst and devastated the underpinning of the entire U.S. economy. The thing that couldn’t possibly fail did. And so did the banks. Well, a couple of them, at least, until we coined a new phrase, “too big to fail.” Throw a bizarre oil spike out of nowhere and, based on no fundamental logic except fuckery and greed, as we’ve covered before, and every corner of the economy was thrown into a complete tailspin.

Of course the lessons we learned during this time, things like expanding social safety nets, initiating government spending programs, flooding money through the markets to provide liquidity to the financial sector, bailing out large corporations and the like, would be instructive for the next recession in both positive and negative ways. First, we saw what worked. More importantly, we saw that it wasn’t enough. If we were ever to face such horrific circumstances again, we would know what to do.

Recession Eight: Trump pours gasoline on everything, then flames out from a virus.

The recession of 2020 was technically only three months long. But the reason it was so short is because of the historic amount of financial support that went coursing through the system at every level. And we’re going to speak to this in more detail shortly. Suffice to say, that we have yet to really come to grips with this era, despite the NBER officially calling the end so quickly. While I suppose the next recession, if that really does occur, will be linked to the COVID recession, it will also be right on many levels to separate them.

I know the numbers are pretty fresh, but looking at them again in black and white is pretty staggering. Heading into COVID, Trump was able to hop into the Obama era slipstream and continue fueling a red hot economy. Trump initiated seismic tax cuts that generated a windfall for the top 1%, loosened regulations in an already low interest rate environment and browbeat the Fed into keeping rates pinned low, and increased government defense spending with alacrity. And then the hammer dropped as the virus took hold of the population and the economy.

A 53.8% decline in GDP. I mean, Jesus. 13% unemployment. Entire sectors completely shut down. Only essential workers and businesses operating. Complete and utter pandemonium, the likes of which I hope we never see again and can’t believe we made it through. Like seriously. Had we not suddenly adopted every possible Keynesian measure and lessons learned from under-funding certain efforts during the financial crisis, we would have been even more fucked than we were.

Chapter Three

Thwart. Mitigate. Or Fuck it.

Another reason I like this topic is because no one is an expert while it’s going on. Everyone is just guessing. And not one of the recessions that we mentioned was the same as another. They were all brought on by unique circumstances and they manifested in different ways, depending upon the relative strength of the economy prior, the nature of the period of expansion and public policies that were in force to mitigate or perhaps exacerbate the severity of each one.

Recessions have occurred throughout history, but seem to be a recurring character in the theater of capitalism. That’s not to say it’s unique to capitalism, as some argue. Centrally planned economies, fossil fuel dependent economies, emerging market economies, mature market economies with and without robust social programs—all fall victim to downturns for various reasons. And external events have a huge impact on a nation’s ability to maneuver through economic hardship. War, sanctions, expanding or contracting trade alliances, inventory shortages or gluts, natural disasters, poor crop yields, you name it.

It’s rare that a single event such as 9/11 has the ability to generate a recession, as there are typically underlying conditions and weaknesses that hasten or deepen one, and a confluence of events that contribute to it. Though they’re hard to spot when you’re in it.

Conversely, if the underlying conditions are relatively strong, then even the most extreme event can create a shock like the one felt on 9/11, but the ensuing downturn will be relatively short. 9/11 is a curious one, as the NBER has us backsliding months prior to the event. So, in this case, the immediate surge in war and terrorism spending may have even propelled a faster recovery.

Overall, the tendency is to blame the system. And, by that, I mean the economic framework. That capitalism is to blame. And I get it. But I think that’s reductive. My Marxist friends would disagree with this and promote the idea that red hot economies that crash every seven to ten years are exactly a symptom of the capitalism system. But that’s not my assertion. Not to mention, I would agree. This is where we can go back and reaffirm some of the concepts we’ve worked through together to contextualize boom times and downturns and examine the policy measures used to bring us to full recovery.

Prior to the Great Depression, recessions in America occurred nearly every two to three years. It’s hard to describe the volatility of our economy as the nation struggled to grow competing economies in the North and the South, manage westward expansion and compete with Europe. The flip side reality of this era was that we were the ones catching a cold when Europe sneezed.

Even periods of remarkable GDP growth, such as we witnessed in the post-Civil War era and the height of the industrial age, were punctuated by severe disruptions that mostly impacted the lower and working classes of the country.

The Great Depression was remarkable on many levels, but mostly because it was so indiscriminate. Nothing gets the attention of policymakers more than when upper classes are hit in the wallet. Our response to the Depression was sweeping reform that took place over a decade. Each reform added another layer of defense for the poor and working class people of the country. Many of these were too late to mitigate the circumstances of those most affected by the Depression, which is something that neoliberal intellectuals like to point to.

It was the war that got us out of the Depression.

It was monetary policy.

It just “worked itself out.”

The real answer is all of the above. A country as rich in human capital and natural resources as the United States was bound to recover. And the war economy did contribute to the recovery, though not all at once. It’s never one thing, but a suite of measures and levers pulled at the right, or perhaps the wrong, time to cap the peaks or curtail the troughs. The key is balance.

So, it’s a statement of fact that we have had fewer recessions in the modern era—the past 50 years that we’re highlighting—than we did in previous eras. And it’s also a statement of fact that the standard of living has steadily increased in the United States over the same period. So who’s right? Keynes? Marx? Hayek? Schumpeter? Stiglitz? Larry Summers? Paul Krugman? Milton Friedman!?!?!

For every era, for every circumstance, there’s an economist with a theory that has some merit. (Except Arthur Laffer.) Our contention has been that, on balance, the Keynes to Krugman wing of economic theorists have a better approach. Again, I’m speaking in generalizations, but we’ve covered much of this before. The broad idea is that if we’re going to exist within a global market system, then we must accept that there will be periods of prosperity and growth and periods of decline.

In order to balance the highs and the lows, it is better to operate within a clearly defined regulatory framework with domestic policy measures that anticipate both the highs and the lows.

The counter argument made by the Friedmans and Hayeks of the world is that the absence of regulation and domestic policy intervention is more natural, just and efficient. As much as I’ve worked to decimate this line of thinking, it’s important to recognize that, when it comes to economic policy, nothing is binary. Governments have indeed intervened to the detriment of growth and economic health.

But the more compelling storyline over an extended period of time is that markets are not natural, just or efficient without clearly defined regulations that curtail the forces of greed.

And that, as we demonstrated in our MMT episode and others, an economy as robust and dominant as ours, with not just a sovereign currency but the global reserve currency, has far more levers than most others to manage volatility and how our population is impacted at home.

So let’s talk about the would-be recession of 2022 or 2023…or 2024.  

Of all the policy tools at its disposal, this rate is believed to be the most powerful because it has the ability to expand or constrict money supply in the nation. The higher the rate, the more it encourages savings through making things more expensive and borrowing more difficult. The cheaper the rate, the more incentive there is to expand money supply, which theoretically heats up the consumer economy. Obviously, I’m oversimplifying, and the Federal Reserve has a number of powerful weapons to choose from, but this is the one that really pervades both the discourse and the consumer economy.

One of the most direct impacts of this rate is the home mortgage market. Most mortgage holders have availed themselves of 30-year fixed rates during the low interest rate environment over the past ten years. But an increase in the federal funds rate has made it more expensive for banks to access funds, so the increase is passed through to the consumer in the form of higher rates.

The problem occurs when new mortgage seekers go to the market, they’re now encountering higher fixed rates, which makes adjustable rates more appealing because they’re offered at a lower interest rate at initiation. But, as the terms suggests, the rate is adjustable after a period of time, depending upon the rate that it’s fixed to—notably the Prime Rate. This is already rearing its ugly head, as adjustable rate mortgages have doubled since January. It’s a bad trend; one that led to the housing collapse in 2008.

So why would the Fed increase interest rates if it knows it’s going to potentially hurt working class borrowers? And why did a relatively marginal increase in rates, compared to historical federal funds rates, cause the markets to freak out?

Well, it’s really all about inflation. Inflation is considered the most evil of all economic factors. And for good reason, though you can’t look at it in a vacuum. The working theory that inflation ruins everything is what leads us to take measures like raising interest rates to cool the economy, no matter the level of suffering it inflicts. The idea is to beat consumers and businesses into submission by taking money out of the economy and reducing the incentives for risk taking.

Of course, the flip side is that when consumers don’t spend, businesses don’t earn and people get laid off. So when Paul Volcker choked the economy, first under Carter then under Reagan, by hiking interest rates to 20%, his method was one of a perceived last resort. Instead of pouring money into social safety net programs and cutting taxes on the lowest income brackets and hammering the rich with tax increases to curtail their fucking spending, he jammed us into a recession.

But if we zoom out, we can clearly see there were other factors at play at the time. Remember that the strategic oil reserve was only instituted in 1975, so fluctuations in energy prices had a huge impact on inflation. The global markets were in disarray relative to the dollar because Nixon had taken us off the gold standard peg. There was more at work than just interest rates and inflation, but since that’s the avenue we took, that’s the playbook that was burned into our minds.

Shock therapy always comes at the expense of the public. These days, the Federal Reserve is loath to raise rates because cheap money has been a boon to big business. But what did big businesses do with all of their newfound cheap money? They went on buying sprees. Not of talent, but of their own stocks.

Jay Powell and his recent predecessors at the Fed know this. That’s why rates have only marginally ticked up. His message wasn’t to consumers, even though it will impact all of us. It was really to public companies and Wall Street. His way of acknowledging that we’ve created a bubble economy of phantom gains and returns in the equity markets, and that the music has to stop at some point. That’s why you’re seeing capital flee the stock market. It’s less about the rates than it is the wink-wink, nudge-nudge that the party is over.

In fact, the history of the Federal Funds Rate shows how insanely low it still is. If you take the post-financial crisis easy money era out of the picture, you have to go all the way back to the early 1960s to find a time when this rate was so low. Corporate America has been flush for so long with easy money, that the general sentiment among policymakers is that we have to rip off the bandage at some point. If the Fed was serious about really trimming inflation through hiking interest rates, it would be signaling Volcker-like remedies. Instead, we’re still relatively low and only approaching historical norms.

The panic you’re sensing on Wall Street, by the way, is a little different this time around. That’s what makes this a fascinating period. Not only is capital fleeing the equity markets, but the bond market is down as well. This is a rare correlation. And it’s bleeding over to other speculative areas like crypto. So, right now, investors are just taking their lumps. There’s no safe harbor. Even cash is garbage because of inflation. This really is quite a pickle. But Wall Street, as we’ve learned the hard way, isn’t Main Street.

Chapter Four

Yo Max, We Gonna Be Okay or What?

The pain on Main Street is related to what Wall Street is feeling, but still very different. Inflation is crushing the working class. Of this, there can be no doubt. And, as we’ve talked about, inflation in the United States is a combination of real world events and corporate greed. What’s bizarre about this moment in time is that we’re somehow in the midst of a recovery, early in the expansion phase with respect to inventories and purchases, late stage with respect to where unemployment is, in complete crisis due to inflation, have a strong dollar, failing equity and bond markets, artificially pumped up energy prices and low taxes. I think it’s why so many pundits are just throwing darts.

If we look at one of the most reliable predictors of recessions over the past several decades, it’s not at all clear we’re headed toward a recession. The Conference Board Leading Economic Indicators Index measures ten key components of the economy:

1. Average weekly hours in manufacturing;

2. Average weekly initial claims for unemployment insurance;

3. Manufacturers’ new orders for consumer goods and materials;

4. ISM® Index of New Orders;

5. Manufacturers’ new orders for nondefense capital goods, excluding aircraft orders;

6. Building permits for new private housing units;

7. The S&P 500® Index of Stock Prices;

8. Leading Credit Index™;

9. Interest rate spread between 10-year Treasury bonds and the federal funds rate;

10. Average consumer expectations for business conditions.

So here’s what the index says:

“A range of downside risks—including inflation, rising interest rates, supply chain disruptions, and pandemic-related shutdowns, particularly in China—continue to weigh on the outlook. Nevertheless, we project the U.S. economy should resume expanding in Q2 following Q1’s contraction in real GDP. Despite downgrades to previous forecasts, The Conference Board still projects 2.3 percent year-over-year US GDP growth in 2022.”

This index has demonstrated that in every recession for the past 50 years, the 12 to 15 months leading into what is ultimately characterized as a recession by the NBER is preceded by a decline in the aggregate data. Right now, we’re on a flat to slightly positive trajectory even with all of the disruptions—oil, inflation, conflict, et al.—built into the model.

Now, add to the mix that hourly wages are growing. Soft indicators like travel and out-of-home dining are all up to pre-pandemic levels. Job openings are spiking rapidly, so there aren’t enough people to fill the openings buuuuut… the average wage is now no longer outpacing inflation.

According to the St. Louis Fed, personal household savings, which is a percentage of disposable income that people have to put towards things like investing or household spending, is back to around 6.2% as of this month. That’s off from the incredible highs of the pandemic where people had jobs and few extraneous discretionary expenses, or no job but a government subsidy. But, it’s still only half of what it was during the '50s, '60s and '70s. Essentially, even in a strong job market with a full post-pandemic recovery, people have less money in their pockets than generations prior.

All of which doesn’t indicate one way or another what lies ahead. Rules, even ones like the Conference Board follows, are meant to be broken. And, if we head into a technical recession, it won’t be entirely self-inflicted. Global forces are indeed dragging down the economy. We’re undoubtedly playing a role, particularly where interest rates are concerned, because we’re still the financial center of the world.

What’s really nuts is that the dollar is relatively strong, despite so many normal drags on its value. And, since most of the world’s debt is dollar denominated, it will be slightly more expensive to pay down debt throughout the world. That has an outsized impact on emerging markets, and we’re already seeing signs of nations having difficulty managing their debt burdens.

Equities and bonds are down together.

The dollar and crude oil are up together.

Up is down.

Dogs and cats, living together.

Then there’s China. China is both a producer of cheap goods from cheap labor and resources, and a large consumer of goods now that so much of the Chinese population is moving into the consumer class. Because the country’s COVID policies are so restrictive, there is indeed a slowdown of manufacturing, which in turn impacts consumption within China. If you’re not working, you’re not buying. There’s an empty seat at the high roller’s table right now, so the pot is just going to be smaller until China comes back online.

That said, the core indicators of U.S. economic activity are really strong. Like, really really strong. Employment. Velocity. Growth. Etc.

Let’s look at what I believe is the only metric that matters: Household wealth.

Recession, no recession. Here are the most recent household wealth figures from the end of 2021 compared to 1989.

• In 1989, the top 10% of U.S. households possessed 60% of the wealth in the country. The bottom 50% had 3.7%.

• Right now, the top 10% holds 70% of the wealth, a 15% increase. The bottom 50% has 2.6% of the total wealth, a 30% decrease.

Everyone in the middle is squeezed, and their wealth is even more dramatically impacted during recessions or inflationary periods because these are the people we’re relying on to really keep the economy humming. They’re the consumers. The spenders on necessities, but also discretionary items such as travel. The bottom 50% is that “paycheck-to-paycheck, can be wiped out by a student loan default, rent hike, credit card debt, hospital bill or what have you” part of the economy.

So, no. You’re not going to be okay. But it has nothing to do with whether there’s a recession coming or not. If we have accepted the general trajectory of a global market economy where we sit at the center, then we must accept the cyclical nature of it. Recovery, expansion, overheating, recession. Unforeseen events will periodically disrupt this rhythm, but if we zoom out, this is the song that’s on repeat.

If that’s the natural tendency of a market system, then the only choices we can make are in preparation for and in response to such events. The most consistent trendline in the United States is the most important metric, and that’s household wealth. And we’re not talking about 1%, winning lottery kind of wealth. We’re talking about assets versus debt. Owning more of your home than you owe. Hell, just owning a home at all. Reasonable debt relative to one’s income. Consistent hourly wage growth that outpaces inflation over time.

Right wing sources, and even most moderate so-called liberal media outlets, will tell you that consumer spending as a result of robust social safety measures like unemployment insurance, the child tax direct payments, wage increases—anything that suggests the bottom 50% of the country has been given too much—are responsible for inflation. And, therefore, whatever recessionary environment we find ourselves in. It’s simply not true.

Corporate profits are up 25% already this year. That’s on your back.

Energy prices are up, and yet there’s enough supply to meet and even exceed demand. The whole market is built on a fucking lie.

China has effectively taken 15% of the global economy offline, so cheap goods and raw materials are harder to procure. That’s true. But also… not your fault.

There’s only one consistent theme in all of this. When times are good, the top has seen incredible gains. When times are bad, the top continues to see incredible gains. All because the system allows for this phenomenon. We covered it in our student debt episode. We covered it in our capitalism episode. Our corporate irresponsibility episodes. And so on.

Every decade since the free market neoliberal order took the wheel, household wealth has declined for the bottom 50% of the country. The reason we weathered the pandemic financial storm is because we unleashed the power of the federal government at all levels, not just the financial markets. Then we allowed for corporate greed to claw back all of the gains that were made. For the briefest of periods, a matter of months, household wealth actually increased during the pandemic. This was the metric that was too much for the establishment to bear. A bridge too far for the monied class.

When we finally come to terms with the fact that the power elite in this country, irrespective of party affiliation, holds such disdain for the working class, we’ll see the entire picture more clearly. It’s not that they don’t want you to get ahead as much as they need you to stay behind. There’s a difference.

Campaign finance reform.

Humane immigration reform.

Student debt relief and reform.

Early childhood education.

Child care.

Incentivizing clean energy and eliminating oil and gas subsidies.

Eliminating the carried interest tax loophole.

Increasing corporate taxes.

Direct child tax payments instead of credits.

Universal healthcare.

Congressional ethics reform.

We have the answers. We know what to do. Of course, they’ll never get done by millionaires in Congress. But here’s the thing. Even if we do them all, recessions will happen. The only difference is that it won’t wipe out the bottom 50% of the country, forcing it to start over from scratch as happens once a decade, every decade, like clockwork.

More for them means less for you.

Occupy the Democratic Party.

Recession hype is just a distraction.

Here endeth the lesson.