While the United States does not have a 25% unemployment rate like the 1930s, many Americans feel like they are struggling, worried about their deteriorating financial situation and are working harder and longer hours, only to stagnate or fall behind. On TikTok, this zeitgeist is called the “Silent Depression,” comparing the current times to the era of the Great Depression.
American households have incurred more than $1 trillion in credit card debt, tapped into their 401(k) retirement plans and many are unable to purchase a home as mortgage rates have soared past 7%. Even with all of the current challenges, the standard of living remains far ahead of the dire circumstances of the Great Depression.
The Financial Problems
Although wage growth climbed 0.2% in August, according to the recent jobs report data by the Bureau of Labor Statistics, it is not enough to curb the impact of high inflation and the rising costs of living. Housing, education and healthcare costs continue to appreciate, leaving families with less discretionary money. Consequently, an attendant mental health crisis accompanies the stress and anxiety of constantly trying to keep up financially.
There has been a noticeable downward shift in the job market, particularly for white-collar professionals. Competition to get a job is intense, the hiring process seems to take forever, jobs are being relocated to lower-cost cities and countries and workers’ salaries are being cut by employers by 47%.
Unlike previous generations, young adults face limited social mobility and difficulty getting established. High levels of personal debt from credit cards, loans and expenses, like medical bills, can make it nearly impossible to save or invest money to build a nest egg for the future.
Many companies prefer to hire gig, contract and temp workers to save money and cut costs. Professionals relying upon temporary roles live a precarious work life, always worried about their contract being cut and needing to find a new gig. College graduates—deep in debt—may find a job, but it is far beneath their level, and they are underemployed. What little money they save is eaten up by the fall in purchasing power. If this isn’t enough, the quick ascendancy and deployment of artificial intelligence raises a gloomy spector of a technology that may ultimately replace you in the workforce.
Is It Really That Bad?
The TikTokers opining on their perceived Silent Depression have legitimate concerns, such as the inability to realize the American Dream, as they can’t afford to start a family or purchase a home. However, comparing it to the Great Depression is hyperbolic. This is reminiscent of the old Harry S. Truman adage, “It’s a recession when your neighbor loses his job; it’s a depression when you lose yours.”
The Great Depression was a brutal and prolonged economic crisis with the stock market plummeting, large numbers of people losing their jobs and homes, many banks going under, unemployment spiking to high levels and undergoing a deflationary spiral. For comparison, the current unemployment rate is 3.8%. Stocks are near highs, and the U.S. has thus far been able to avoid recession. The misery index is far lower than the high-inflationary period of the 1970s, let alone the Great Depression.
Nevertheless, this doesn’t take away from the reality of the modern-day fear of families falling out of the middle class or losing their livelihoods.
Some call attention to the struggles of the “forgotten middle class” or the notion of a two-tiered “K-shaped recovery.” They worry rising inequality isn’t fully captured by statistics, like gross domestic product. A large segment of workers, especially Gen-Z, face depressed opportunities compared to prior generations despite headline growth.
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