George F. Will: The Good Bad News

Two axioms: all news is economic news. And economic news is always bad. All news is economic news because all news conditions the public mood, which shapes mass behavior, which has economic consequences. All economic news is bad, not just because the phrase "good news" is a journalistic oxymoron ("We don't report the planes that land safely") but also because any economic development can be construed ominously: Inflation is down? The economy might be slowing. The economy is growing? Inflation might be coming. Either way, woe.

So, herewith a third axiom: Really grim news always contains good news. Remember Orwell's rule that the quickest way to end a war is to lose it? One way to reduce the price of oil is to have an economic slowdown. The price plummeted from a July 3 peak of $145.29 to $62.65 last Friday. Is everybody happy?

Not exactly. Hugo Chávez, Vladimir Putin and Iran's ruling mullahs, whose geopolitical ambitions are lubricated by high oil prices, are dismayed, which augments America's stock of happiness. Some Americans, who discern a lead lining in any silver cloud, fret that falling oil prices will lure less virtuous Americans out of the market for electric cars, if there ever is such a market. The plummeting profits of oil companies please people who think profits represent economic success but moral failure. Such people are not among the millions of individual investors who own 23 percent of the companies and who do not worry that their pension funds are among those that own 27 percent of the oil companies, or that their IRAs, mutual funds, etc., are among those that own 43.5 percent of the companies. Anyway, as Congress contemplates yet another "stimulus," the plunge in oil prices has delivered the equivalent of a huge cut in income taxes.

In September, housing starts fell to a 26-year low and there were fewer building permits than at any time since November 1981. This is not nice, but it is necessary: Housing prices will not stabilize until the stock of unsold houses contracts.

"We are," says economist Allen Sinai, "going through a quantum downward shift in consumer spending." This, too, is partly good news. Consumer confidence plunged more in October than in any month since measurement of it began in 1978. Personal consumption is 70 percent of economic activity, so there never seems to be a good time for retrenchment. But if not now, when?

Does anyone doubt that Americans consume too much and save too little? In the three decades prior to the 1990s, Americans saved nine cents of every after-tax dollar. Since then, they have saved 3.5 cents of each dollar; in each of the last three years they have saved less than a penny of each dollar. They kept their consumption rising not only by scanting saving but also by supplementing credit-card debt with home-equity loans.

Happily, all across America, state lotteries—government mechanisms for fleecing the gullible for the benefit of governments—are suffering because people with shrinking disposable income are dispensing with those instant "scratch" tickets. If you are among the millions who own Wal-Mart stock—either directly or through this or that fund—you are benefiting, as that company is, from the new frugality.

The chief economist for the National Retail Federation expects November-December Christmas sales to decline … not at all. They are expected to rise, but only 2.2 percent over last year's sales. That would be the smallest growth since way back in the grim, hardscrabble days of … 1933? No, 2002 (1.7 percent). A survey of consumers reveals that they plan to … cut back? No, they plan to increase spending on gifts to $832, up just 1.9 percent from last year.

At 8:30 a.m. this Thursday, the Bureau of Economic Analysis will announce the economy's third-quarter growth rate. (Second-quarter growth was 2.8 percent.) It is possible that the economy grew, if only slightly. If so, in spite of histrionic talk about a reprise of the Depression, there is still not even a recession, as commonly defined—two consecutive quarters of contraction. Inventories are low, so they will not dampen a recovery when the economy's resilience disappoints those people who are eagerly anticipating capitalism's funeral.

Speaking of Thursdays, if the nation wants a really Rooseveltian intervention, it should have Thanksgiving this Thursday. By 1939, it was clear that the Depression had survived the New Deal's remedies for it: at 17.2 percent, unemployment was higher than in 1931 (15.9). So FDR threw Thanksgiving into his battle to get happy days here again. Inconveniently, 1939's November had five Thursdays, so Thanksgiving was to fall on the 30th day of the month. FDR, who was not inhibited by the Constitution and certainly would not be by the calendar, decreed that Thanksgiving would occur on November's fourth, not its last, Thursday. He thereby added a week to the Christmas shopping season and gave rise to this ditty: