The Asian economic crisis ended almost five years ago. Before it ended, the crisis spread throughout the whole world albeit less severe. Thankfully, all of that are nothing but history for now, until the next business cycle. However, the US, of which also didn’t escape the economic recession like the others, seems still suffering the recession, or at least it is not yet on the expansion curve.
From my perspective, though admittedly I lack full economics knowledge to draw an academically sound conclusion, the US has been in a prolonged economics recession.
Southeast Asian and Latin countries suffered major depression in 1997 and 1998. Japan deteriorating economy made the situation worse. Then the world major economies followed suit. After some political upheavals and regime change, things started to look good. In Malaysia, a few national projects suspended during the economic recession started to get off the ground again. In neighboring Indonesia, voices of discontent went low and thus allowing the rebuilding of its ruined economy. Half way across the world, Argentina abandoned its currency and embraced the US dollar.
Despite the recovery made by various countries, meanwhile the US was just started to go into what is now dubbed as the worst recession since the Great Depression of the 1930s. Later, the event of September 11th proved to be decisively bad for consumer confidence. If I remember correctly, the airfare from Detroit to Los Angeles and back again was merely around USD 100. Perhaps it was cheaper but it was something the airlines companies did to combat the falling consumer confidence.
As the US economy continued its free fall, firms had to cut back cost in order to survive. In the newspaper, it was reported that Boeing had to retrench approximately 30 000 jobs. That was just one firm. Just imagine what the US total job loss was. Furthermore, the Enron scandal certainly didn’t help and worse, the newspeak lovers spent $87 billion on a foreign country due to bad political maneuvering.
Regardless of reports on economic recession, I didn’t see the effects early through my own eyes since things were going great in Michigan. No cuts whatsoever. Yet in the early mid 2003, Governor Granholm announced cut back on education funding of Michigan public universities. University of Michigan was not excluded and thus, many desperate measures are taken. Some of them are reducing the libraries operating hours and the increase of its tuition fee. All the sudden, everything was affected directly.
And now in the face of few positive trends, somehow things are not so convincing. The unemployment rate fell point two percent to 5.7% and yet, merely 1 000 jobs were created. In fact, the current paradox to the US economic issue is the unemployment rate. In spite of falling rate, there are simply not enough jobs being created and up to now, total job loss in the past few years is yet to be balanced out by total job creation. Some economists are calling this phenomenon as ghost employment – robots are taking over human but I suspect there is too much sci-fi element behind that reasoning.
p/s – more blog on the unemployment rate paradox at David Smith’s EconomicsUK.com
