The upside of a recession: a lesson from experience

I used to make a good living. I was an editor and a manager with a stable job and a mid-range salary. Probably could have finished out my career without much challenge. Sure, I was bored. Probably would have left that job for something a bit more challenging eventually. My great plans got sidetracked when my life fell apart. My husband went rogue, became erratic, and--dare I say--dangerous. Enter the lawyer. Got a divorce. Lost my house. Tried to hang onto my life, but harassment by the ex led me to the inescapable conclusion that the only thing to do was disappear.

So disappear I did.

Quit my job. Moved. Moved again. Moved yet again. I'm no gypsy, but I realized it was going to be more difficult to track me down if I kept on the go. Maybe it was overkill. At the time, I didn't think so. Went back to school. In three short months, I went from stable life, stable job, decent mid-class income in a city that I loved to no life, no job, and no income living in a place that I consider to be slightly better than a pig farm. I haven't really seen much improvement in any facet of my life in the past eight years. Granted, I have chosen to pursue this degree thing and so what has happened to me in the past decade is my own doing.

The point is, my life took on a very different economic reality when I went from earning an income, putting away money in a retirement fund (which is virtually non-existent given the events of the last year) with full health benefits, to scared to freakin' death that something terrible might pop up in my health before I finish, scared to death that my car is going to give out, scared to death about the repayment of these student loans. I can work myself into a real panic if I think about it too seriously.

There is an upside. I have learned that more than 50% of my spending in those days was unnecessary. I have learned to do without things I don't need. Oh, I do have my splurges, but they don't come daily. They come monthly. I don't need matching table linens and curtains, knick-knacks, collectibles, dinners out...the list goes on and on. I will never waste money the way I did back then. In reality, I won't ever be able to even if I wanted to. My life is cash-strapped to the end. And yet, I still choose to pursue this schooling. I must be insane. Or I'm just too afraid to allow those student loans kick in.

My point is this. America may actually find itself in my shoes. Americans may find themselves without that disposable income for long enough, spending patterns will change. Attitudes about spending will change. The average Joe will see the need for a healthy savings account. This cavalier attitude about carrying such great debt with an unfailing belief in our ability to meet the minimum payments will not be something that just I sweat, but that most American's sweat.

A Bright Spot in a Turbulant time

According to the Federal Highway Administration: "In April, Americans drove 245.9 billion miles — 1.8 percent less than a year ago. "

"April marks the sixth month in a row that we have seen a decline in vehicle miles traveled across the country," says Jim Ray, the FHA's acting administrator. "We're seeing Americans drive less across the board."

"Americans drove 9.6 billion fewer miles in May compared with the same period last year, a 3.7 percent decline and the biggest-ever drop at that time of year, the Transportation Department said on Monday."

"The agency has been collecting data since 1942. Ray says vehicle miles traveled have risen steadily from one year to the next. Driving did taper off during the energy crisis of the 1970s and early 1980s when gas prices were high. At that time, drivers cut back by 500 million miles. But highway officials liken that to a plateau — and this to a cliff."

"It is the steepest decline in vehicle miles traveled ever recorded," Ray says. "What we're estimating now for the 2007-2008 figures are 30 billion miles. So we're seeing a difference of 60-fold." See full article here.

The NY Times reports here that there is hope that gas prices will continue to drop throughout the end of the year, baring any geopolitical problems or a hurricane on the Gulf Coast that wipes out a refinery again. Equally as encouraging, they say that food commodities may have overshot the mark and drop somewhat as well.

I am most encouraged by our collective response by cutting back on driving. As I mentioned in an earlier post, in the post-$4/gal world, my butt and that gas-guzzling pimpmobile are parked at home.

It also occurred to me that the Olympics start on August 8 (I think). I think that when the world gets to Bejing and sees that gas prices are so low they are not going to say "oh, those lucky Chinese". I think they are going to be appalled by the government subsidizing gas prices. Also from the NY Times:

"From Mexico to India to China, governments fearful of inflation and street protests are heavily subsidizing energy prices, particularly for diesel fuel. But the subsidies — estimated at $40 billion this year in China alone — are also removing much of the incentive to conserve fuel."

Sure, the US still uses most of the world's gas, but if wasteful Americans can temper their gas consumption, there is no reason that emerging markets can't grow responsibly as well. We have to be smarter these days. I think we are capable of it.