The R word

The business and financial punditocracy is terrified of ever uttering the word "recession" because they think they'll get blamed for self-fulfilling prophecy if it happens. But now they are starting to utter it, in the required format "I don't think it will happen but it might," which means they do think it will happen. Some are even gloomier and are embedding the D word in breathy exhalations.

Now, I've lived through a couple of recessions. I remember the food in the college dining hall suddenly getting a lot worse when the recession of the early 1970s knocked back the endowment that had previously given us lobster newburg. (No joke.) And I remember that George Bush the First suffered mightily in his re-election bid from an economic slowdown. Bill Clinton's campaign motto was "It's the economy, stupid," and it worked. Neither of these events were a big deal though. The unemployment rate bumped up a bit, people got anxious, and then unemployment went right back down and we kept on being a rich country.

But now it's different. Workers' real incomes have been basically stagnant now for 20 years, a shrinking percentage of people get health insurance through employment and those who do are already paying more, and of course there are all those folks out there having trouble making their mortgage payments. A spike in unemployment next year will be a disaster that could easily feed on itself and spiral out of control. More foreclosures, and a wipeout of the construction industry. Fewer people with health insurance and the possibility of an actual contraction in the most reliable growth sector of the economy. A collapse in consumer spending and hard times for retail. The export driven economies of east Asia will suffer and all that capital investment in factories will suddenly be unproductive. A global slowdown will just exacerbate our problems here as demand for U.S. capital goods falls. State tax revenues will decline just as infrastructure problems are growing truly dangerous. Will we see Bushville squatter camps on the edges of our cities?

And what will this do to our politics? It ought to be good for Democrats, but when the Republicans in the White House and Congress find themselves staring at a massive electoral wipeout, the prospect of bombs falling on Iran is going to start looking even better to them. In the 1930s, we got Roosevelt and the Germans got Hitler. Which way would it go in the U.S. today?