By JAY AMBROSE
Scripps Howard News Service
December 11, 2008
You'd think as much by the reactions of some commentators saying they knew how awful life was way back then, when in fact the bureau is giving us one specific technical definition of recession that mainly tells how some indicators had reached their peak late last year and have been slowly going downwards since.
Lately, of course, economic activity has been contracting a whole lot more drastically and quickly, and soon enough we will have arrived at another and more common definition of recession, two successive quarters of a decline in gross domestic product. Real pain is becoming the lot of vast numbers these days, including not a few members of what is easily the most discussed segment of our population this past half century and more, the Baby Boomers.
Already, many of these 76 million people born between 1946 and 1964 have lost significant portions of their life savings through the stock market's nose dive. The hit on retirement accounts is estimated to be $2 trillion. And guess what could come next -- inflation that will eat away at any money they recoup.
More than likely, most stocks will go back up, at least in the long run, and that's fine for the youngest of the Boomers, but what about the ones getting very close to retirement or already retired? One estimate has it that between 2006 and 2010, some 290,000 members of this group will have left their jobs. Retirement savings are meant to be spent when people retire, not to gradually accumulate so there will be large stacks of money next to their coffins someday.
Even supposing the market makes a speedy recovery, the Boomers now have something else to worry about, namely a government that seems intent on fixing everything today by ruining everything tomorrow.
Runaway inflation already seems virtually inevitable despite the moment's worry about deflation -- not enough money circulating to keep businesses humming and producing jobs. The Federal Reserve is addressing that by increasing the money supply by billions daily. The total of emergency-money creation is said to add up to something like $1.5 trillion. There's another $8 trillion or so in pledges by the Fed and Treasury, and while some of those pledges will never translate into actual money-supply increases, some will. Too much money chasing too few goods gives you devalued money.
So there's Baby Boomer Joe and his Baby Boomer wife Nancy sitting there with savings that are finally back to what they used to be in absolute dollars. The trouble is that inflation has made them worth half of what they used to be worth. Meanwhile, federal deficits are so huge -- a trillion dollar one is coming around the bend -- that vast amounts of money are once more being sucked out of the private economy through borrowing, which might put us back to where we were before recovery began.
One positive development is that President-elect Barack Obama has named former Fed chairman Paul Volcker as an economic advisor. Volcker understands the inflation threat and has some ideas that can avoid the worst. Let's hope Obama listens to him and others like him, because if he doesn't, we could have the National Bureau of Economic Research someday telling us that a bout of stagflation -- serious inflation and a recession -- began about the same time as programs meant to obliterate the misery.
That will be sad news for the Baby Boomers, along with everyone else.
He can be reached at SpeaktoJay(at)aol.com
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