College Republican Federation of Virginia

I am sure most of you out there remember the comments Phil Gramm made a few days ago. His comment on a “mental recession” made headline news and immediately afterwards, condemnation from McCain and Obama were expressed. But were his comments completely off base?

First of all, I think we need to define what a recession is. A recession is “A period of general economic decline; specifically, a decline in GDP for two or more consecutive quarters.” As of right now, we have not met this criteria. The first quarter of 2008 had our GDP growing a mere 1%. So our economy experienced growth, despite the growth being rather anemic.

So if we have no hit a recession hit, why are Americans feeling like the end of the world is near? This economy is actually doing better than it did during the recessions of 1990 and 2001, but Americans seem to be feeling it harder. Neil Irwin of the Washington post explains in the article the increased price of gasoline, and thus the increased price of everything else is making Americans feel the pinch. The article explains:

“Someone who has to pay an extra $25 to fill up his car is reminded of that cost once a week — or more often if you count the times he is driving down the road and sees the $4 per gallon price in giant numbers on a sign. Technically, he is no worse off than if his rent had increased by $100 a month. But it feels a lot worse.”

The example above mixed in with the media’s constant reports of impending economic disaster (more recent examples include the bailouts of both Freddie Mac and Fanny Mae), Americans truly believe economic turmoil is hitting this country. Interestingly enough, in polls where citizens were asked how they were doing personally, they typically said they were doing fine despite minor fears. However when asked about the economy as a whole, they said it was going to hell in a hand basket.

So is this a mental recession? I will agree with Phil Gramm that it most certainly is. While calling Americans whiners is not the best thing to do during a election year, sometimes the truth about a situation is hard to hear. We can only hope Americans who know better can explain to their neighbors that things are not that bad, and hope Liberals do not manipulate this fear to get elected.