Time Mag: It's Gloomy and It'll Be Worse Ahead
A Ford Motor Co. spokesman last week called the auto industry's slump a "depression."
As always, nonwhites have suffered the most from the recession. Herbert Hill, who is in charge of labor affairs at the NAACP, says that unemployment among the black population in some major cities is approaching 30% or even 40%. Says Hill: "For the black community, this is a full-scale depression. Many of the gains that we have made over the past 10 years are being eroded." At the same time, community-action-program funds are drying up.
Some consumers are so alarmed that they are muttering about a return of the Great Depression of the 1930s.
Ford and Chrysler announced massive new layoffs for this month. Automakers now plan to close at least 14 assembly plants and put as many as 230,000 production workers, clerks, accountants and executives out of work, and about 20% of General Motors' U.S. employees will be idle in March.
But the decline is no longer confined to autos and home building, which is down 33% this month, as it has been for most of the last year. In classic fashion, the recession has begun to work its way through the entire economy. Although demand for home freezers is still high, with families stocking up on food to beat rising prices, sales of other major appliances—TV sets, washing machines, dryers, vacuum cleaners—are turning sick, and layoffs are spreading in the plants that make them.
The current recession has also shown a greater capacity to frighten the public than any of the previous postwar downturns. The next report of the University of Michigan's respected Survey of Consumer Confidence, due this week, will show the deepest pessimism about the economy since the survey began in 1946.
Are even harder times coming? Probably. The recession still has some way to go, and though economists fore see an upturn some tune by next year, it is difficult to pick its timing and predict how far down the economy will go before it turns back up. Indeed, the course of the recession so far is something of a lesson in the hazards of economic forecasting: its length and virulence have surprised almost everyone.
Where's Bottom? In any case, the recession has by now picked up enough momentum to drag the economy lower before it turns up again. Right now, economists are watching closely a decline that is just beginning in spending by companies for new plants, machinery and other capital goods.
MP: This was from the December 9, 1974 edition of Time Magazine, and the article was written towards the end of the Nov. 1973 - March 1975 recession. Note: I altered some of the text above so that the specific time period was not obvious. Notice the distinct similarities to the reporting about today's economy.
HT: Ken Duetsch