The real economy of production and jobs is not yet in a state of collapse, even though much of the commentary suggests it's on the edge of ruin.
Comment: It is fascinating to see how many comments here reflect individuals' preference for anecdotal data over hard data when trying to realistically assess the state of the economy. If a person wants to see today's situation as a return to the Great Depression, then no hard data will persuade him otherwise. Even so, I commend Samuelson for giving some useful context to the "fearmongering" that abounds elsewhere.
Comment: Price inflation is over 10%. Unemployment is close to 10%. GDP has been negative for over a year. These are the facts if you calculate these numbers the way they were calculated before Reagan/Bush/Clinton administrations began cooking the numbers. Check out shadowstatistics.com for the real numbers.
The government is lying to you. Corporations are lying to you, fake journalist like this guy are lying to you. The US produces nothing but bombs and debt. Is that a healthy economy? You are living in the decline and fall of IOUSA. Move to the country and start growing your own food or better yet do what I did and get out of the country.
Comment: Good for Robert J Samuelson that he can afford such a rosy view of the economy based on the number of cars Americans are "expected" to buy in 2008 and conveniently excluding from his calculations the two worst recessions of the past 35 years. Nice to blame "media hype" and "political finger pointing", but the reality is that just as the boomers, who have worked since we were teenagers are getting ready to retire are instead working 50 plus hour weeks to try to keep up. We have been the most productive generation in the history of the world and now are expected to continue working into our golden age while the results of our productivity are being squandered in Iraq on a war to support oil revenues and corporate interests instead of investing in the technologies that will see us as a nation into the future is unconscionable. Less from this guy. More from someone who cares about our fate as a culture.
Comment: A vicious circle is a positive feedback loop, not a negative one. Positive feedback loops (vicious/virtuous circles) feed on themselves, getting bigger and bigger; negative feedback loops (self-regulating systems) dampen themselves out. Whether the effect is good or bad has no bearing on whether it's a positive or a negative loop.
While this is a technical point, it does not provide much reassurance that the author knows what he's talking about.
Comment: A vicious circle is a positive feedback loop, not a negative one. Positive feedback loops (vicious/virtuous circles) feed on themselves, getting bigger and bigger; negative feedback loops (self-regulating systems) dampen themselves out. Whether the effect is good or bad has no bearing on whether it's a positive or a negative loop.
While this is a technical point, it does not provide much reassurance that the author knows what he's talking about.
Comment: A vicious circle is a positive feedback loop, not a negative one. Positive feedback loops (vicious/virtuous circles) feed on themselves, getting bigger and bigger; negative feedback loops (self-regulating systems) dampen themselves out. Whether the effect is good or bad has no bearing on whether it's a positive or a negative loop.
While this is a technical point, it does not provide much reassurance that the author knows what he's talking about.
Comment: A vicious circle is a positive feedback loop, not a negative one. Positive feedback loops (vicious/virtuous circles) feed on themselves, getting bigger and bigger; negative feedback loops (self-regulating systems) dampen themselves out. Whether the effect is good or bad has no bearing on whether it's a positive or a negative loop.
While this is a technical point, it does not provide much reassurance that the author knows what he's talking about.
Comment: There is always something wrong with the economy, the question is how bad is it? The investment banks have taken a big hit because they violated simple economic principles. the Fed under Greenspan let deregulation get so bad that it allowed banks, investment firms and lenders to make lots of bad loans and then hide them in bad ratings, complex combinations with good loans and off balance sheet toxic investments. Housing is bad in a number of major markets, but many smaller markets never had any significant change. I live in one of those areas myself. However, unemployment is still around 5%, near full employment levels. Business outside of housing and financials is running pretty smoothly. Oil prices should fall as the dollar strengthens. It will take a while for banks to readjust back to where they should be and housing to burn off the excess. Banks have to make loans or go out of business, so that correction should come fast. Housing buyers are now trying to buy, but having trouble getting mortgages. The buyers are there to at least slow down the real estate price fall when the banks get back on the horse. The Fed is loaning money more than printing it, so inflation won't be highly affected by the cash infusion. All major investment banks except Bear Stearns reported above estimate quarterly results last week. Downward spirals are a definite possibility, but they haven't taken a big effect yet. If we keep people working then they keep paying their bills, including non-toxic mortgages, and the spiral will stop. All of the Fed strong actions are deliberately short term. When I look outside the finance and housing sectors I see relatively few problems. There is one principle to keep in mind, I call the first law of journalistic economics. Journalists have to pay bills, and gloom and doom sells.
Comment: If we all can't see that something is wrong with the economy then we are all smoking a lot of really good stuff.
Comment: I kept asking myself when we owned out hous that the value of the house was going up each month so fast that it was like getting a free mortgage...something was wrong with that picture.
Comment: I agree with C. Mac Lean...things are different this time around. The creative lending practices used by home lenders have put people in homes that they can't afford and have no way of getting out of them. Gasolline is going through the roof and no cure in sight on either front. So...people can't afford to live in the home they bought and will lose it through foreclosure and they can't afford to drive their respective cars. Put that with the NAFTA fiasco and they may lose their jobs as well and since we don't manufacture anything here anymore their chances of getting another job is poor at best. The government and the rich corporations went too far this time. They entered the hallowed ground of the American people and fleeced from them the only things they had left. Now, Bernanke wants to print more money and help the financial sector that started everything in the first place and further screw the law abiding, responsible citizens that built this country to what it was (not is). Look at all the paper you want and consult with all the "experts" you want. This was/is the final ploy to break the American bank....the tax paying citizens of this once great country. Now that the government and its corporate allies have all the money what will they do with it? Probably invest it across the pond and send us into a fatal nose dive. Even tiny ants know that, to succeed, you need a strong work force.
Comment: A recession is when you lose your job,your neigbor loses his job. The for sale signs go up and nobody buys. Your kids move back home. Not when bussiness news say were not thier yet. Four more years GOP and history proves what their capable of .They have been close to the big one,maybe they will get the golden ring in the next term.
Comment: Two things are different this time, and the author managed to leave both out.
The first is the explosion in gasoline prices, from $2.00/gallon in 2005 to the prediction of $4.00/gallon by the summer. If all other factors were equal, that is still a significant impact on the average American's paycheck.
But all other factors aren't equal. The second problem is that the housing crisis did not start with falling prices, it started with interest rates re-setting too high due to ARM's.
This time around, the employment rate isn't the issue - folks are employed, but when their mortgages re-set AND gas prices double at the same time, people can't catch up.
On paper, the definition of recession may be a rise in unemployment plus a contraction of GNP, but the reality is that recession for too many of us means we can't pay the electric bill, no matter what we do.
Unfortunately, we no longer can borrow against the equity in our homes, or sell them.
Hide behind your ivory economics tower all you want - the rest of us know a recession when we see it, and we know that this is one cycle that won't self-correct any time soon.
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