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The past two weeks have been a roller-coaster ride for the economy, and not the modern, flashy, hi-tech metal roller coaster, but the old, wooden, rickety, fear-of-falling-off-the-tracks type of roller coaster. Watching the cable news networks is a never-ending panoply of falling stocks, closing banks, and disappearing retirement funds. Yet, like the first-class passengers on the Titanic who thought nothing of the “little bump,” to many here in the Tennessee Valley, it all seemed remote. Scary, worrisome, but still remote. Until the layoffs and plant closings were announced last week.
Five local companies all announced full or partial plant closings. Dunlap’s Tecumseh engine assembly plant, Trenton’s Shaw plant, Chattanooga’s Arcade Marketing, McMinn County’s Allied Hosiery and Fort Oglethorpe’s Mohawk Industries all made layoff announcements. All told, more than a thousand jobs will be affected. And that’s just among those five. Elsewhere around the region, companies both large and small are tightening their belts. In Tennessee, unemployment has risen from 4.7 percent a year ago to the current rate of 6.6 percent. In Georgia, things are even worse, as unemployment has increased an incredible 76 percent from a year ago.
Yet, unemployment numbers only tell half the story. Wages for those who have jobs are stagnant, and with inflation running at above average levels this past year, what is known as “real wages” has actually dropped. Simply put, the buying power of your paycheck is getting weaker every month.
At the same time, health insurance rates have risen to record levels, an expense employers have to pass along to their employees. And this is often at the same time as benefits are cut back or deductibles increased.
A presidential campaign that started off with a myriad of issues—foreign wars, terrorism, oil prices, global warming, abortion, etc.—has now coalesced into one single overwhelming issue: the economy. Both major party candidates have floated various proposals to address the economic implosion, and nearly everyone is aware of the unprecedented $700 billion bailout package passed after great acrimony by Congress. But very little of what is being done and said is reassuring to middle America. It’s hard to get excited about long-term economic solutions when you or your neighbors are out of work.
However, this is not the end of the world, or even our own way of life. The economy is wounded, but far from fatally so. The “doom and gloom” crowd of television and radio talking heads are so used to exaggerating the news they are seemingly incapable of looking past the immediate problems. Anyone with a basic knowledge of history will know that the longest economic recession since World War II lasted all of 18 months, back in 1981-82. And it was followed by eight straight years of strong economic growth.
There are many real problems we face right now, but the best way to respond is to not panic. Be smart—pay down your credit cards, hold off on major purchases, so on and so forth—but at the same time, don’t stuff all your money in your mattress. A wise man once said that no matter how bad things appear at the moment, “This too shall pass.” It won’t be easy, it won’t be smooth, but we will survive and prosper once again.
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