Free Markets, Free People


Economy: No Longer In “Free Fall”

While I appreciate the fact that we’re hearing a more positive spin from the Obama administration concerning the economy, the so-called “glimmers of hope” aren’t really anything but outliers.

Worse-than-expected news on unemployment and home sales Thursday dampened optimism that a broad economic recovery might be near.

Jobs losses aren’t expected to bottom out until the middle of 2010 and the housing market hasn’t bottomed out yet either:

Meanwhile, the National Association of Realtors said sales of existing homes fell 3 percent in March to a seasonally adjusted annual rate of 4.57 million units, with February revised down to 4.71 million units. Sales had been expected to fall to an annual rate of 4.7 million units, according to Thomson Reuters.

Per the analysis, the best reading of these economic indicators is that perhaps the “free fall” is coming to an end.

“The economic downturn remains intense, but it is no longer intensifying,” said Mark Zandi, chief economist at Moody’s Economy.com. “We are still falling, but we are no longer crashing.”

So, while we may have passed what some are terming the “crisis stage”, the economy is still contracting. I’m coming to believe that we may not see any real and meaningful “glimmers of hope” until mid 2010.

~McQ

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12 Responses to Economy: No Longer In “Free Fall”

  • Though really, is it free-fall when you nose down and pour on the power?

  • What really irritates me is the difference in coverage between now and when Bush was in office.  The economy was unarguably better during most of his tenure than it is now (though the bottom dropped out toward the end), but we got quite a lot of gloom ‘n’ doom from MiniTru the whole time.  Unemployment up 0.1%???  HORRORS!  “Worst Economy Since the Great Depression!” (TM)

    Now, with the economy doing quite poorly, we see lots of stories about “glimmers of hope”.

    Bah.

    I just hope that the policies started by Bush and continued by TAO that have pumped HUGE amounts of new money into the system don’t lead to massive inflation in a year or two.  I’m afraid that they will.

  • So, paraphrasing Sir Winston Churchill, is this the end of the beginning or the beginning of the end?

  • In Reason magazine, May 2009 issue, Deirdre McCloskey:

    “At less than full employment the Keynsian stuff works. So the minority of the quickie expenditures will “put people back to work”–until we return to almost-full employment, which will happen pretty quickly in the recovery. At that point the stimulus will merely crowd out private investment. In the short run people might get more cheerful too, always a good thing. But in two years the recession will be over. And the myth will grow up–rather similar to the ones about FDR and war expenditure–that Obama did it. Essentially, Obama will get credit for the self-adjusting character of the economy. I reckon we should start preparing that other face of Mount Rushmore.”

    • We shall see.  If the billions of freshly-printed dollars pumped into the economy cause inflation or even hyperinflation, and / or TAO succeeds in ramming through a carbon tax, the economy will tank worse than it is now.

      But let’s consider the alternative.  Many of us think that Porkulus, TARP and similar programs done by Bush and TAO were horrible ideas, not only because of the problems that massive debt will cause in the years to come, but also because they really won’t do anything in the short-term to fix our problems.  What if they DO seem to fix the problems and inflation DOESN’T show up?  Will we need to reconsider our economic theories?

      • Of course we’ll have to.  I’m surprised you’re asking – or are you being rhetorical?

        • Not that I think there’s any danger, I’m fairly convinced that once we’ve had the revolution, and removed the lefty pawns from the education system, we can use this as a future example of what not to do.

        • Sorry; I’m so used to dealing with liberals and their endless ability to rationalize ANYTHING in the interests of preserving their preconceived notions (aka psychotic fantasies) that I forgot for a moment that not everybody is so deranged!

  • So what did that trillion dollar stimulus accomplish?

  • Someone should ask whoever is making those silly comments such as “there are glimmers of hope in the economic news” (need I name him?) how often they stand on line in a supermarket, or look for a job, or pay for bills (or for the taxes of this government). Because if they were not as out of touch as they are, they would see that 1) there are no glimmers of hope, 2) unemployment continues to rise, and 3) it is only going to get worse when GM and Chrysler go under. Can I say “100,000 unemployed in one week”?

  • So does this mean that we can cancel the “stimulus” package?

  • You folks all know that unemployment tends to lag the economy, right?  In pretty much every recession, the bottom of the recession was well before unemployment started dropping.

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