As Economic Growth Fails, How Do We Live? Part I
Part I: The Four Horsemen of the Economic Apocalypse
by Craig A. Severance
December 15, 2011
As recently as a year ago it was considered heresy to suggest economic growth would not soon resume. Now, however, as The Big Engine That Couldn't has faltered for several years, it is becoming increasingly clear the economy is running off the tracks. Both investors and the public are beginning to realize the long-revered goal of endless economic growth is failing.
Anger and fear are widespread, as the livelihoods and hopes of ordinary Americans are being destroyed. Anger runs among the "99%" over economic injustices that favor the "1%". Fear, however, may run among 100% over this question: How do we live when economic growth fails?
How Do We Live? These three articles will briefly lay out our current predicament, and discuss ways we can cope. Today's post will cover four major reasons -- dubbed here "The Four Horsemen of the Economic Apocalypse" -- why nothing seems to work anymore. In the second post, next week, "Out With the Old", will cover the inevitable end to seven unsustainable practices. The final post in this series, "In With the New", will discuss seven ways of living which we can embrace in a world with failing economic growth.
If we act purposefully now as individuals and as a society, we may help to avoid the most chaotic and destructive effects of collapse. First, we need to understand what has gone wrong -- which we will discuss in today's post. The adaptations laid out in the next two posts represent ways we may find a "softer landing" -- but we cannot expect a return to what we came to believe was "normal".
Three Years to Get Back to 2007 Levels. After the close of 2nd Quarter 2011, the U.S. Bureau of Economic Analysis published its official estimates of U.S. Real Gross Domestic Product (GDP). By the end of 2nd Quarter 2011 the U.S. economy was officially producing about the same as its end of 2007 peak -- in other words, essentially no overall economic growth for 3 1/2 years.
Image Source: Shadow Government Statistics
Less Per Person. Though the economy was no larger, U.S. population had increased, so as of the end of 2nd Qtr 2011 there was 3.5% less GDP to go around per person in the U.S. than at the end of 2007. (By comparison, there was a 35% increase per person in China over this same period.)
Heading Into Decline Again? Having just officially climbed back to 2007 GDP levels, it seems like a really bad dream the economy could once again start heading backwards. Yet that is exactly the prediction experts are now making. On November 7th, the Economic Cycle Research Institute, a group with a stellar record of predicting recessions, re-affirmed its recent call the U.S. economy is once again slipping into recession. So that no one would mistake what that means, in its September 30 press release, the group said bluntly, "Here's what ECRI's recession call really says: if you think this is a bad economy, you haven't seen anything yet." Also, on November 25th, Deutsche Bank revised it projections and is now warning of a "deeper" Eurozone recession.
Even Worse Than We're Being Told? As bad as the official numbers noted above may seem, the actual story is likely even worse. John Williams of Shadow Government Statistics notes that government methods of counting inflation in prices have chosen to statistically ignore many price increases, and thus count a misleading share of observed sales as economic growth. Calculating the same way the government previously used to measure the inflation rate, SGS shows a much higher inflation rate that is more in keeping with everyone's experience of skyrocketing fuel and food costs, health premiums, etc. With distortions removed, SGS estimates the U.S. economy has actually been stagnant or shrinking for most of the last decade:
Source: ShadowStats.com
Why Nothing Seems to Work Anymore: The Four Horsemen of the Economic Apocalyse. The news that a bad economy is now expected to get even worse is particularly crushing with so many still out of work, and after so much money has been spent. Leaders debate austerity or stimulus, but common sense says something more must be happening.
The "Four Horsemen of the Economic Apocalypse" have been revealed by many astute observers. Researchers and analysts such as Chris Martenson ( "The Crash Course" video course, and book) and Richard Heinberg ("The End of Growth") have written extensively about the first three Horsemen. The original Tea Party movement (which began as anger over government bailouts of Wall Street), and the Occupy Wall Street movement have focused attention on the fourth Horseman. To know what lies ahead, we need to know what is wrong:
Click here to read entire article.
by Craig A. Severance
December 15, 2011
As recently as a year ago it was considered heresy to suggest economic growth would not soon resume. Now, however, as The Big Engine That Couldn't has faltered for several years, it is becoming increasingly clear the economy is running off the tracks. Both investors and the public are beginning to realize the long-revered goal of endless economic growth is failing.
Anger and fear are widespread, as the livelihoods and hopes of ordinary Americans are being destroyed. Anger runs among the "99%" over economic injustices that favor the "1%". Fear, however, may run among 100% over this question: How do we live when economic growth fails?
How Do We Live? These three articles will briefly lay out our current predicament, and discuss ways we can cope. Today's post will cover four major reasons -- dubbed here "The Four Horsemen of the Economic Apocalypse" -- why nothing seems to work anymore. In the second post, next week, "Out With the Old", will cover the inevitable end to seven unsustainable practices. The final post in this series, "In With the New", will discuss seven ways of living which we can embrace in a world with failing economic growth.
If we act purposefully now as individuals and as a society, we may help to avoid the most chaotic and destructive effects of collapse. First, we need to understand what has gone wrong -- which we will discuss in today's post. The adaptations laid out in the next two posts represent ways we may find a "softer landing" -- but we cannot expect a return to what we came to believe was "normal".
Three Years to Get Back to 2007 Levels. After the close of 2nd Quarter 2011, the U.S. Bureau of Economic Analysis published its official estimates of U.S. Real Gross Domestic Product (GDP). By the end of 2nd Quarter 2011 the U.S. economy was officially producing about the same as its end of 2007 peak -- in other words, essentially no overall economic growth for 3 1/2 years.
Image Source: Shadow Government Statistics
Less Per Person. Though the economy was no larger, U.S. population had increased, so as of the end of 2nd Qtr 2011 there was 3.5% less GDP to go around per person in the U.S. than at the end of 2007. (By comparison, there was a 35% increase per person in China over this same period.)
Heading Into Decline Again? Having just officially climbed back to 2007 GDP levels, it seems like a really bad dream the economy could once again start heading backwards. Yet that is exactly the prediction experts are now making. On November 7th, the Economic Cycle Research Institute, a group with a stellar record of predicting recessions, re-affirmed its recent call the U.S. economy is once again slipping into recession. So that no one would mistake what that means, in its September 30 press release, the group said bluntly, "Here's what ECRI's recession call really says: if you think this is a bad economy, you haven't seen anything yet." Also, on November 25th, Deutsche Bank revised it projections and is now warning of a "deeper" Eurozone recession.
Even Worse Than We're Being Told? As bad as the official numbers noted above may seem, the actual story is likely even worse. John Williams of Shadow Government Statistics notes that government methods of counting inflation in prices have chosen to statistically ignore many price increases, and thus count a misleading share of observed sales as economic growth. Calculating the same way the government previously used to measure the inflation rate, SGS shows a much higher inflation rate that is more in keeping with everyone's experience of skyrocketing fuel and food costs, health premiums, etc. With distortions removed, SGS estimates the U.S. economy has actually been stagnant or shrinking for most of the last decade:
Source: ShadowStats.com
Why Nothing Seems to Work Anymore: The Four Horsemen of the Economic Apocalyse. The news that a bad economy is now expected to get even worse is particularly crushing with so many still out of work, and after so much money has been spent. Leaders debate austerity or stimulus, but common sense says something more must be happening.
The "Four Horsemen of the Economic Apocalypse" have been revealed by many astute observers. Researchers and analysts such as Chris Martenson ( "The Crash Course" video course, and book) and Richard Heinberg ("The End of Growth") have written extensively about the first three Horsemen. The original Tea Party movement (which began as anger over government bailouts of Wall Street), and the Occupy Wall Street movement have focused attention on the fourth Horseman. To know what lies ahead, we need to know what is wrong:
Click here to read entire article.
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