There’s no denying it. 2008 was a tough year.

“The ironic thing is that in January 2008, the economy was already shrinking, we just didn’t know it yet,” Goshen College Associate Professor of Economics Jerrell Richer said.

Richer, a former resident of California who watched the housing bubble build, has been following the economic downturn with some interest.

“We didn’t learn until November that the economy peaked in December 2007. Intuitively, though, even in early 2008, people knew we had problems.”

He pointed to the string of events most are now quite uncomfortably familiar with. Near the beginning of 2008, foreclosures were already popping up around the West Coast. Although followed by a multi-month lull, the first of the RV layoffs in Elkhart County began in January. Gasoline prices began their climb to prices previously unheard of. Then, with the announcements of the Bear Stearns and Lehman Bros. fiascoes, the downturn began to pick up speed.

Even with those notices, Richer said, we still didn’t realize how bad things were going to get, because the data being released — unemployment rates and the like — were nearly three months old.

“It’s like if you’re driving in your car and you look at the speedometer,” he explained, “but it tells you how fast you were going three months ago.”

As everyone from political pundits to presidents and average joes have been trying to make sense of things, one question has received more attention than almost any other. What actually initiated the fall?

“I think we do know what some of the causes are, but some of them are immediate and obvious while others are fundamental, subtle and long-term,” Richer said.

He believes three particular long-term trends were integral in greasing the wheels for the economic slide.

In the 70s, he said, average household savings were close to and sometimes more than 10 percent of their income. In 2007, that number was less than 1 percent, almost zero. He argues that it didn’t happen all of a sudden.

“During the 90s, we experienced the longest post-World War II expansion,” Richer said. “People didn’t think there would be another recession. They got the idea that they don’t need to save.”

That lack of disposable income and personal liquidity has devastated many in the country who have lost their livelihoods and had nothing in the bank in case of trouble.

The second trend Richer faults is the increased inequality in income distribution. He has been following the income share separation recorded by the U.S. Census Bureau, showing how income is divided among each fifth of the population. Since 1967, the percent of income held by the lowest fifth has dropped from 4.2 percent to 3.4 percent, the percent held by the second fifth has dropped from 11.1 percent to 8.7 percent, the percent held by the middle fifth has dropped from 17.6 percent to 14.8 percent, the percent held by the fourth fifth has dropped from 24.5 percent to 23.4 percent, and the percent held by the top fifth of earners has increased from 42.6 percent to 49.7 percent, almost half the income in the entire country.

“You can’t continue this trend forever,” Richer said. “That’s one reason why there’s so much pain right now. People have less income to save, and that builds up resentment.”

The final trend, another he has followed for years, is the country’s dependence on a depletable resource, particularly oil. According to information he collected form the U.S. Information Agency, the cost of oil averaged around $18 per barrel from 1989 until 2003. The notion that it would be a lasting price stability was naive due to the nature of being a depletable resource, Richer said.

He also noted that some economists, including one who predicted the cost spike in 2005 through 2008, have suggested that as soon as the economy recovers, the cost of oil could skyrocket to $400 per barrel. At that point, gasoline would cost close to $20 per gallon.

“I think we’ll get our banking system figured out, and I think we’ll pull ourselves out of the housing slump all right,” Richer said, but expressed his doubts about how we will react should the cost of oil rebound as significantly as predicted.