I’m Mad As Hell (Part 4): Declining Economy Causes Spiraling Stress

Morris Segall      declining economy, economics, future trends, public unrest, recession, stress

In a recent article published March 23 for SPGTrend.com subscribers, we examined the social and political toll of the current recession and their longer term impacts on the U.S and overseas economies.  Over the course of several blog posts, we will take you through the content of this piece and put what we’re going through into context.

In part one, we outlined an introduction for this series.  Part two discussed the first four trends and developments.  Part three discussed public anger.  Today’s entry, part four, will discuss the ramifications of an even more insidious by-product of the recession: stress.

In addition to anger, the American public is emotionally stressed and physically debilitated.

After experiencing the heady and seemingly inexorable rise in consumer net worth and incomes from the expanding economy, rising stock markets and most importantly, the outlandish increase in real estate values over the 2003-2006 periods, the American consumer has seen his world literally come crashing down since the second half of 2007. It is estimated that the declines in housing values and the stock markets together over the last 5 quarters is more than $15 trillion or an entire year’s GDP.  As a result, the American consumer that exuded great confidence and risk tolerance has become stricken with fear.

In the article, “The Fed’s Conundrum,” April 5, 2007, we commented on what we felt was an increase in the fear factor for consumers, which was going to suppress consumer spending and appetite for risk, going forward. We based this on the increase in inflation at the time and the accelerating decline in the housing cycle underway, leading to increased mortgage foreclosures. In addition, as government statistics would later prove, job creation was peaking that spring.

Fear is something the American public doesn’t exhibit very often.  The post war period has been one of economic growth and a rising standard of living for Americans. To be sure, the American economy has experienced periodic and sometimes severe recessions, but they have been surpassed by longer and stronger growth periods.

Until this decade. The current recession is the second major economic downturn since 2000 and this recession is by far the most damaging and most pervasive in financial and social terms since the Great Depression of the 1930s. The loss of homes, jobs, net worth, financial security and retirement security has caused the American consumer to doubt his ability to survive and to doubt the American capitalist economic model.

In the current economic environment, Americans are full of worry.  A March 4, 2009 article in Advertising Age noted that prescriptions for sleeping pills and anti-depressants had escalated 7% and 15%, respectively, in 2008 despite a cutback in marketing for such drugs by pharmaceutical companies.

Based on the worsening economic climate in the first half of 2009, we would expect such numbers to increase. In the same Advertising Age article a poll by the National Sleep Foundation released on March 2, 2009, found over 30% of respondents said they are “losing sleep over the economy and their own financial situation”. The National Sleep Foundation Poll found an increase in sleeplessness and anxiety is leading to an increase in depression and a decrease in efficiency and productivity on the job.

Regional and local data particularly in cities hard hit by the recession indicate a dramatic increase in suicides, suicide attempts and calls to suicide hot lines. This emotional stress is taking its toll on the overall physical health of the country. We believe doctor visits for emotional or stress related physical illnesses have increased as well as absenteeism from work. The result is a significant increase in medical care costs for doctor visits and prescriptions as well as a decrease in overall worker productivity. In such an environment, people are more nervous and short-tempered, which often leads to increased aggressive behavior including violence. Witness the increase in mass shootings in the U.S. and shockingly in Europe as overstressed individuals react to the loss of their jobs and declines in their financial conditions. In addition, consumer outlooks for the future are negative.

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