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Given that President Bush says “we’re not in a recession” and he’s wrong every time he opens his mouth, it makes me wonder if we’re in a depression. The basic facts of the situation are:
- Real Gross Domestic Product has stayed stable at $11T (2000 USD) Source: Data 360.org
- The US imports more than it exports - $58.2B for January, 2008 Source: American Economy Alert
- The US carries 80% of its real GDP on an annual basis in debt. The National Debt is now $9.4T. Source: Brillig.com
- The US Dollar’s value has declined 40% against the Euro from January, 2001 to March, 2008. Source: x-rates.com
According to about.com, the definition of a depression is any economic downturn where real GDP declines by more than 10 percent. Given this definition, we’re not in a depression. However, when the import/export, debt, and declining dollar are factored into flat growth, I think we’re in real trouble. We may not be seeing a return to the soup line - yet - but if we don’t get our financial house in order quickly that’s where we’re going to end up.
How do we get well? Start by spending less than we earn by at least 10%, and preferrably 25%. Invest the surplus in reducing debt levels. Exit foreign entanglements and financial commitments. Rebuild the infrastructure of the country with a special emphasis on energy independence. Easy to say, hard to do. Let’s hope our next political leaders have the will and stomach to get this stuff done.
