MILWAUKEE (AP)…Taking shelter with parents isn’t uncommon for young people in their 20s, especially when the job market is poor. But now the slumping economy and the credit crunch are forcing some children to do so later in life — even in middle age.
Financial planners report receiving many calls from parents seeking advice about taking in their grown children following divorces and layoffs.
A new survey by the retiree-advocacy group AARP found that one-fourth of Generation Xers, those 28 to 39 years old, receive financial help from family and friends.
The online survey of nearly 1,800 people ages 19 to 39 also found 57 percent believed they were “financially independent.” But in a separate question, 33 percent said they received financial support from family and friends.
From the Chicago Sun-Times:
For months, Americans have been subjected to a sort of economic water torture — a maddening drip of bad news about jobs, gas prices, sagging home values, creeping inflation, the slouching dollar and a stock market in bumpy descent.
Then came Bear Stearns’ near collapse. Americans are nervously wondering about retirement savings, interest rates, jobs that had seemed safe. They are peering over the edge and asking: How far down?
And the scariest part of all? No one can say for sure.
Even before the crippling of Bear Stearns, the U.S. economy was acting as a slowly tightening vise — an interconnected web of factors combining to squeeze Americans from all sides.
• On top of an economy that was already groaning under the weight of a downturn, Bear Stearns came down like an anvil.
It tied together so much of what’s wrong with today’s economy — the housing crash, the credit crunch and a loss of confidence among investors and consumers alike.
The last time the U.S. economy tilted into recession was 2001. And it was an entirely different animal.
Investors bore the brunt of that downturn as the stock market shook off the excesses of the late-’90s technology boom. Encouraged by their government — and fortified with tax rebates in their pockets — Americans kept spending.
This time around, no one has declared a recession just yet: By the generally accepted rule, that takes two consecutive quarters of shrinking economic activity. The economy came close to stalling late last year but eked out small growth.
But the lack of an official declaration makes the pain no less real.
”I think the current financial crisis looks to me like the worst one since we got into the Depression,” says Richard Sylla, who teaches the history of financial institutions at New York University’s Stern School of Business.
A better comparison might be the economic downturn that gripped the United States in the early 1970s, a time now widely remembered for long lines at the pump. Today gas is plentiful, but summer drivers face the scary prospect of paying $4 a gallon.
Lot further to fall?
And as David Rosenberg, chief North American economist for Merrill Lynch, pointed out in an analysis last week, the parallels to the 1970s go much deeper than just the shock of record oil prices, which tripled during the 1973-1975 recession and have seen a similar rise in recent years.
Then as now, food prices rose along with energy. Then as now, declining home prices gave homeowners ulcers over equity. And the dollar, which held up fine in the 2001 recession, is falling now even more than it did in the early ’70s — 9 percent then on a trade-weighted basis, 14 percent in the last year, according to the Federal Reserve.
If the 1970s truly are a guide, there’s a lot further to fall.
From Business Week, February 15, 2001:
“Harvard gave me the tools and the vocabulary of the business world,” George W. Bush wrote in his 1999 book A Charge to Keep: My Journey to the White House.
A lot has been made of the fact that the new President holds a Master’s of Business Administration, rather than the law sheepskin that most national politicians claim. Some pundits have gone so far as to say that the lessons Bush learned in two years of case studies and financial analysis will make him a better leader — just look at all the stories recently about how Bush is managing the White House as if he were a CEO.
RESUME BUILDING. The story starts with Bush’s application. These days, getting into Harvard’s B-school, No. 3 in the nation according to BusinessWeek’s 2000 Rankings, is no easy feat. Acceptance requires a resume with plenty of real-world work experience, a degree and a strong grade-point average from a reputable undergrad school, top Graduate Management Admissions Test (GMAT) scores, and strong evidence of leadership capabilities.
In 1973, “making the bar [at Harvard] was 98% meritocracy,” says Michael Porter, now one of the B-school’s most well-known professors and an expert in international competitive strategy. Bush’s application landed at Harvard while his dad, George H. W. Bush, was chairman of the Republican National Committee. One year later, Poppy would become the top U.S. diplomat to China.
Surely junior’s application stood out. George W. Bush was a picture of honor once he got past his party days at Yale with the Delta Kappa Epsilon brothers and members of Skull & Bones, a secret society that enrolled him during his senior year — so hush-hush, in fact, it barely gets a mention in his book.