Recession Has Consumers Seeking Solace In Payday Loans | Is A Great Depression Coming?

Recession Is Here, Alive & Well!

The official news is finally in regarding the recession that the American economy has been enduring.

Experts with the National Bureau of Economic Research said that the U.S. has been in a recession since December 2007.

This may not sound like news to most as many have likely felt the impact of America’s latest recession in their day-to-day life already. Many consumers have had to rely on payday loans or other financial strategies a time or two just to avoid excessive late payment penalties on their home mortgages; that is if they still have a home.

Foreclosures are being reported in record numbers, bank fees are rising to cover the lost revenue from mortgage defaults, and unemployment numbers are up from failing businesses closing their doors, or downsizing to brave the pending storm ahead.

Will You Lose Your Job?

It is reported that over 1.2 million jobs were lost in the first ten months of 2008 and that number continues to grow rapidly as businesses fail to cope with the ripple effect of the mortgage crisis.

November, the eleventh month of 2008 is showing an estimated loss of 325,000 jobs. This is a staggering number which shows that this recession may be far from over.

Companies Are Crashing

Below is just a small list of the many well known and reputable businesses that have been forced to downsize or close their doors due to current economic pressures.  They couldn’t get bailout payday loans because they weren’t on Wall Street.

Circuit City (filed Chapter 11)

Ann Taylor -closing 117 stores

Lane Bryant, Fashion Bug, and Catherine’s – closing 150 stores

Eddie Bauer- closing 27 stores

Cache – all stores closing

GAP – all stores closing

Footlocker – closing 140 stores and more after January

Zales – closing down 82 stores and 105 more after January

Disney closing 98 stores and more after January

Linens and Things – all stores closing

Movie Galley – all stores closing

Pep Boys- closing 33 stores

Sprint / Nextel closing 133 stores

Ethan Allen – closing 12 stores

Wilson Leather – all stores closing

Sharper Image – all stores closing

K B Toys – closing 356 stores

And many more….

The current economic downturn is one of the longest since the Great Depression of the 1930’s. Only two of the past 10 recessions since the great depression have lasted longer than a year. Is a depression like unto the Great Depression likely to occur again and if so just how bad will it be? We will attempt to answer these questions below.

Is an Economic Depression Possible?

According to U S news,

By any measure, our current economic suffering pales in comparison with what the nation endured from 1929 through 1939. Still, most economists are predicting a long, difficult period ahead. Could it eventually become a depression? It’s possible — but not likely.

If so, how bad will it be?

A Depression Today Would Be Worse Than That of the Thirties

When comparing societies today with that of the great depression era, we have to take into consideration how society has shifted from agricultural farming to the big cities.

At the beginning of the 20th century, 95% of the population was involved in agriculture or worked their own lands for some, if not most, of their provisions. Today the roles have been reversed with only five percent of the population in agriculture and 95% in the cities. Because the Great Depression effected primarily business and industry, it was those in the cities who were affected the most. The same would occur if a depression on the same scale were to hit our economy today, and in that case, payday loans couldn’t even come close to covering the effects.

The short answer to this question is that a Depression today would be a lot worse.

What to do in the meantime?

Until elected and government officials try to work their magic to soften the blow or try and pull us out of the recession we are currently in, we will have to wait and hope for the best.

White House Deputy Press Secretary Tony Fratto said that even though the recession is now official, it is more important to focus on the steps being taken to fix the economy.

“The most important things we can do for the economy right now are to return the financial and credit markets to normal, and to continue to make progress in housing, and that’s where we’ll continue to focus,” he said. “Addressing these areas will do the most right now to return the economy to growth and job creation.”

It would be considered well advised however to take steps to prepare for the worst such as stocking up on non perishable food items in the event you may need them later due to job loss or a real depression. This is sound advice no matter what the time or season.

Also, as in any crisis there is opportunity. This may be the chance many have been waiting for. With stocks hitting lows it may be the best time to buy.