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What’s Different This Time?


Normally, we talk about economies in terms of separate countries, as in this country has a strong economy, while that country has a weak economy.  Often, we slice economies by industries, as in this industry is doing well, while that industry is doing poorly.  Since the 1970s, we have also sliced it by region, as in the northeastern U.S. is growing, while the southern U.S. is stagnant.  However, while this recession is unusual in so many ways, one of the most unusual features of this recession that it has sliced the economy by class, as in the lower class is suffering disproportionately.

Make no mistake – this is not new.  Normally during a recession, the upper class will lose some value in their portfolios, while the lower class will lose their jobs and maybe even their homes.  What is new . . . is the extent or degree.  The jobs lost during a normal recession do eventually return.  Unfortunately, it is estimated that 40% of the workers fired in this recession will find their jobs have been permanently eliminated.  It will be a very long time before we experience another 3.6% unemployment rate.

Does that require any policy changes?  Are there any political consequences to this?  What will be the impact on society as a whole?

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