The collapse of Lehman Brothers on Sept. 15, 2008, symbolized the worst of the financial crisis, and recent articles in the financial media have revisited that period to mark the fifth anniversary.
Three months before Lehman filed for bankruptcy, the June 2008 Elliott Wave Theorist noted that the number of jobless Americans had climbed to its highest level since the 1974-1975 recession. The issue went on to say:
The Elliott Wave Theorist has long projected that the economic damage of this [historic economic downtrend] will be more severe than the Great Depression, which bottomed when unemployment was at 25 percent. No matter what the news or the short term market action, don’t lose sight of how big this depression will be.
-- The Elliott Wave Theorist, June 2008
And the recent news that the 7.3% August 2013 jobless figure was a tick lower than July's is the type of news that can cause people to lose sight of the big picture of our troubled economy. In truth, the lower jobless percentage is nothing to cheer about. Here's why:
The only reason the rate declined is that the overall labor force dropped by a larger 312,000, a possible sign of discouraged long-term jobless dropping out.
The labor force participation rate, which is the percent of the population either working or looking to work, took a tumble to 63.2% — its lowest level since 1978.
-- Wall Street Journal, Sept. 6, 2013
In fact, looking at the results for men only, August marked their lowest participation rate since 1948.
With fewer people working full time, household incomes have also been dropping. Even after five years of a so-called economic recovery, household income is 6.2% lower now than at the start of the 2007-2009 financial crisis when the median was $55,569, according to Sentier Research, a Maryland firm that focuses on household income and demographics. In July 2013, the median annual figure was $52,113.
No, bread lines are not forming around city corners, but the trends in incomes and labor force participation should give Americans pause. As Robert Prechter has noted, bread lines are "what you will see at the low."