2. We're worried about jobs
The effect of the Great Recession on career patterns is still emerging, but from what I've seen, it's a more profound change than what the Great Recession has produced in consumer behavior. My career pattern has certainly been very different from my Dad's. He stayed with one company all his working life, whereas I've changed employers more than once and even shifted industries two or three times. And it looks like the next generation or two shows another new pattern.
Two things seem to characterize work in the Great Recession. First, for more and more young workers, work consists of not just one job but of a number of jobs cobbled together into a whole. It may be handful of part-time jobs, none of which comes with benefits or any real security, but the two or three jobs during a regular working week add up to full-time work. There's not much sense that the whole is stable, and not much faith that any one of those part-time jobs will turn into a full-time gig.
A significant number of the younger workers I've talked with during the Great Recession are working two jobs (or more), even if one of those jobs is full time and does come with benefits such as health care. No job is permanent or very stable, and entire sectors of the economy seem to be in a state of constant upheaval, so the smart thing to do is to be constantly on the lookout for part-time work that can result in learning and then the demonstrated mastery of new skills.
The process of a career is no longer one of moving up the ladder inside a company or even in an industry, but instead one of aggressively adding related skills and experience because it is impossible to tell when a whole category of jobs will disappear or demand a new set of skills.
3. We have no retirement security
This finally leads to the last way in which I can see that the Great Recession has changed behavior. It's not just that jobs are less secure and job paths are less predictable -- although they are -- but also that the old advice on how to achieve end-of-career security seems so, well, irrelevant. Obviously, if you don't have a job that provides health care or a retirement plan, your future is less secure than those workers in my Dad's generation who could count on a defined company pension and company health insurance.
But the sense of insecurity goes beyond that generational shift. Until the series of bear markets that began in 2000, many workers without defined benefit retirement plans could believe that putting money away in tax-deferred 401k's and other defined contribution plans was reasonably likely to result in a reasonably secure retirement. For many workers, I think that faith, which had been eroded, was finally shattered by the Great Recession.
It's not just that the repeated bear markets of the last decade have eroded wealth (especially when you add in the effect of the global financial crisis on the value of the family home) but also that the nature of that crisis has convinced many workers that the game is fixed. They've watched their own wealth decline at the same time that the Wall Street folks, who bear a considerable share of the blame for the crisis, have not just escaped any kind of punishment but actually seen their wealth increase.
I think one of the biggest effects of the Great Recession is a sense that the game is stacked against the average guy or gal, and that the habits of saving and regular investing that were held up as the path to financial security are a cruel sham. We've all had black humor conversations around the water cooler (or the office printer) that work some riff on the joke that our retirement plan was to work until we die -- or beyond, if we can figure out how to do that.
I think this marks a huge difference between the Great Depression and Great Recession. As painful as the Great Depression was, it resulted in a program called Social Security that increased the financial security of the average worker. Many current workers fear that Social Security won't be around for them.
That wouldn't be quite so devastating if the 401k and other plans that were supposed to replace the traditional defined benefit retirement plan and to supplement Social Security were actually delivering as hoped. But if the Great Recession and the repeated bear markets of the last decade haven't totally dashed that hope, they have demonstrated that getting to a financially secure retirement will be harder than it seemed even as recently as the end of the 1990s.
We know from economic history that one result of this kind of macroeconomic insecurity is that workers react by saving more. That's only logical, and it's indeed a reasonable response to the Great Recession. Pay down debt. Don't take on new debt. Cut spending. If you can't count on high (or even decent) returns on your investment portfolio (and house) to get you to a comfortable retirement, then increase the amount you save.
For individuals, those are all sound reactions to the Great Recession. But unfortunately, the aggregate effect of those sound individual reactions is to reduce consumer spending just at the point when the economies of the developed world need more growth in order to escape the deep budget holes they've dug for themselves. If you're an Italy, Spain, France, Japan or United States looking to reduce the burden of government debt, you'd really like to see more growth rather than less. That's especially true as the developed world confronts an unprecedented aging of its population. (I'd also note that slower economic growth and a desire/need by older workers to work longer isn't exactly good news for younger workers.)
What's needed in a situation like this are programs like Social Security, or the various proposals to increase spending on the social safety net now in the talking stage in China, that provide increased security to make up for the increased uncertainty of the global economy. Unfortunately, I don't see those on the table anywhere in the developed world and certainly not in the United States.
One result is that while the Great Recession won't be as destructive as the Great Depression in the short run, the biggest effect could be a longer-lasting decline in economic growth than that of the Great Depression. (Especially if you assume, as I do, that the existence of nuclear weapons makes a replay of something like the economic stimulus that World War II provided to the U.S. economy impossible this time around.)
And the really cheery thought is that it's not absolutely certain that the Great Recession is really over yet.
Updates to Jubak's Picks
These recent blog posts contain updates to the stocks in Jubak's market-beating portfolios:
- Politics puts Lynas' ambitions on hold
- A golden age for glass
- Is fear keeping us from good stocks?
- Why Jack in the Box is worth watching
At the time of publication, Jim Jubak did not own shares of any of the company mentioned in this column in his personal portfolio. The mutual fund he manages, Jubak Global Equity Fund (JUBAX), may or may not now own shares of any stock mentioned in this column. The fund did own shares of Apple as of the end of March. Find a full list of the stocks in the fund as of the end of March here.
Jim Jubak's column has run on MSN Money since 1997. He is the author of the book "The Jubak Picks," based on his market-beating Jubak's Picks portfolio; the writer of the Jubak's Picks blog; and the senior markets editor at MoneyShow.com. Get a free 60-day trial subscription to JAM, his premium investment letter, by using this code: MSN60 when you register at the Jubak Asset Management website.
Click here to find Jubak's most recent articles, blog posts and stock picks.
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The greatest problem of these times is that the general population is now beginning to understand that they cannot trust any of the power structures of this nation. We are engaged in a rigged game that we cannot escape, let alone find a winning strategy. We are all left to fend for ourselves in uncharted territory, because all previous methods of preparing for financial security have been rendered ineffective. Our 401s have suffered, company pensions so longer exist, savings are earning 0%, bonds are paying less than inflation, the stock market is insane and now "government officials" are discussing how to make cuts to social security and medicare...in other words "we know you already payed for these programs, but you're on your own". Working till we drop IS becoming the only option left to most of us!
the difference between the great depression of the thirties and now is we're not out of it by a long shot.
there are more people here, no trust, and no morals...so most people think its okay to screw you because "its all about me". and its hard not to feel that way when you are bombarded by it daily via
t.v.,internet, media and most everyone you interact with socially.
We have abundant oil (ND, AK, TX, PA) - drill it and export it.
Build pipe lines and employ our 24% unemployed.
We have designers, engineers and advanced technology that can get it done safely and avoid eco-hazards.
We have the American worker that can build anything he puts his mind to.
My word people, if we can build amazing weapon systems, such as satellites, drones, and pilotless helicopters; stealthy ships, fighters and missile protection systems; we certainly have the expertise to safely handle and deliver our energy resources.
And we have biologists that can work in tandem to see that the desert tortoise and sand lizards aren't harmed. All we need is unity and leadership.
We have abundant natural gas that is now just burned off and wasted to the atmosphere. Capture it - build pipe lines and deliver it.
Put liquid natural gas engines in our autos - compress it, and fill your tank at home instead of service stations.
There are places to apply wind and solar energy also.
Import the best minds, like we used to.
We have the greatest technology for safe, cheap nuclear energy and the engineers to design.
We have abundant grain and livestock to feed ourselves.
We have everything except the willingness and leadership to get it done.
What don't we have? ECONOMIC LEADERSHIP!
Second - it seems that many economists are disappointed whether people are SAVING or SPENDING. Make up your dang minds, and know that many people (the little people) have a changed attitude about consumerism. Many people no longer trust banks and large financial related institutions (like AIG and Visa). We don't merely just distrust them, some of us have grown to disdain them. They are the enemy always looking to take as much as they can out of our pockets. (See my Jamie Dimon dart board?)
Third - We little people who have been hurt will never be the same again. If you don't learn from experience, then it's not worth the pain.
Today's statistics do not include people who's unemployment benefits have expired, therefore they are not accurate.
All in all, our true unemployment rate is much higher than the 10% they tell us. It probably rivals that estimate of the Great Depression.
A heightened perception of risk definitely applies to me. You can have a million dollars in savings at age 65, but, with medical costs growing geometrically, bond and money markets producing negative real returns, and stock markets barely even functioning anymore, it still doesn’t feel financially safe to retire. The biggest component of risk is loss of trust in Wall Street and the 1% of the 1% of people who run the economy.
Just went out , put twenty in the tank, I could have waited a day or two to do that, not many cars on the road, started to stop and get a breakfast sandwich, two for three dollars, but then thought, why should I three dollars, it is better off in my account, besides I had my coffee, sitting next to me, and would be home soon so I
made a smoked sausage, with two eggs, and cheese, lettuce and tomato, boy was it good, by the time I ate it it was close to lunch time, so I killed two birds with one smoked sausage and egg, w/ cheese, etc. and kept my three dollars! until the congress, and the leaders start working on the problems I will save every dollar I can!,
The Great Depression that start in 1929 had changed my parents attitude all their lived. My dad or my mom would not spend a dime if they didn't have to. They weren't influence by the expansion of the US economy of the period 1950 through the 1990's. My mom lived till she was 89 years old and was in a nursing home for the last 14 years. And, guess what.... there was still money left over after they both died.
The lessons I learned as a child from my parents has stuck with me all my life and I can't believe how well I have done. I watched my neighbors one after another go into foreclosure, file bankrupties and the list goes on and on.....And, I with half the amount of income of my neighbors I was still able to make it through these very depressing times.
It is sure excess in everything that has brought America down to it knees.
It's as simple as this. When people lose faith they are not motivated to work hard and contribute to the betterment of society. It used to be that people in the US felt good about their country because they felt they were a part of something special. They believed that if they worked hard and played by the social rules they would prosper, but that social contract has been shattered. Today the average worker is viewed as simply a disposable commodity to be tossed aside at will when the company wants to increase profits. They tell workers they are part of a team, but most of the workforce isn't that dumb ( I say most because some people are that dumb and cowardly). How come I'm treated like a team member when it's time to dole out the work, but when it's time for a real pay raise or time to dole out the profits I'm told to get lost because I'm too old, obsolete and expensive?
We are not team members. They hold all the power and they can spend at will to deceive the public and buy off the goverment.
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