Why The Economy Isn’t Tanking
We’ve Gotten Smarter
European stocks closed higher today, and the Dow 30 Industrials closed up more than 410 points. Yet we’ve been seeing breathless reports from the MSM that we’re in the worst economy since the Great Depression. It’s the end of an economic era, and happy times are most definitely not here again.
Ed Driscoll shows us a bit more of the reality of the situation.
Percentage of Americans, according to Gallup, who believe we’re in a recession: 38 percent.
Percentage of Americans, according to Gallup, who believe we’re in an economic depression: 23 percent.
“The second-quarter growth rate for the U.S. economy was revised upward, to 3.3 percent.”
Were the preceding two quarters pretty lousy? Yeah, .9 percent in 2008’s first quarter and -.2 percent in the fourth quarter of 2007. But the preceding two quarters, the economy grew 4.8 percent each.
One pleasant mystery is why the crisis hasn’t hit the economy harder — at least so far. “This financial crisis hasn’t yet translated into fewer…companies starting up, less research and development, less marketing,” Ivan Seidenberg, chief executive of Verizon Communications, said Wednesday. “We haven’t seen that yet. I’m sure every company is keeping their eyes on it.”
At 6.1%, the unemployment rate remains well below the peak of 7.8% in 1992, amid the S&L crisis.
In part, that’s because government has reacted aggressively. The Fed’s classic mistake that led to the Great Depression was that it tightened monetary policy when it should have eased. Mr. Bernanke didn’t repeat that error. And Congress moved more swiftly to approve fiscal stimulus than most Washington veterans thought possible.
In part, the broader economy has held mostly steady because exports have been so strong at just the right moment, a reminder of the global economy’s importance to the U.S. And in part, it’s because the U.S. economy is demonstrating impressive resilience, as information technology allows executives to react more quickly to emerging problems and — to the discomfort of workers — companies are quicker to adjust wages, hiring and work hours when the economy softens.
The other day, I offered my view that Congress today is fundamentally a silly place stocked with silly people. This latest situation illustrates the principle. I don’t know whether Paulson and Bernanke are doing the right thing (I tend to think not). But I know for certain that I’d rather that they be making these decisions than Congress.
As the Instapundit often says, Indeed!