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Who's Afraid of the Big, Bad Economy?
It turns out the boogeyman lurking in the economic shadows may in fact be a...toy poodle. A story in today's Washington Post notes that, while some consumer prices are up (gas, food), the U.S. economy is humming along nicely. Unemployment isn't what it was during previous recessions (and it's debatable whether we're even in a recession), and our gross domestic product, while not exactly buff, is at least fairly robust.
So, what gives? Why are folks scared? And to bring it closer to this forum, why are we not buying and selling houses? (OK, I know part of the answer: can someone say mortgage crisis?).
Anyway, here's part of the Post's story...
"Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.
But the reality is different. According to most broad measures of how the economy is doing, it's not all that grim.
Soft? You betcha. In recession? Quite possibly. And a crisis in the financial markets has rattled nerves for months now. But so far, the economy is holding up better than it did during the last two recessions in 1990 and 2001. Employers haven't shed as many jobs, the unemployment rate is still relatively low, and gross domestic product has kept rising. Things are nowhere near as bad as they were in the Great Depression, or even during the severe recession of 1982-83. The last time consumers were this miserable, in May 1980, the jobless rate was 7.5 percent and inflation was 14.4 percent. Now those numbers are 5.5 percent and 4.2 percent respectively.
This paradox has created a unique challenge for those guiding the economy, who worry that Americans' pessimistic views will become a self-fulfilling prophecy. Two-thirds of the economy is consumer spending. So if people's negative outlook leads them to cut their spending, a steeper downturn could happen."
So, what gives? Why are folks scared? And to bring it closer to this forum, why are we not buying and selling houses? (OK, I know part of the answer: can someone say mortgage crisis?).
Anyway, here's part of the Post's story...
"Ask Americans how the economy is doing, and their answer is stark: It is not just bad, it is run-for-the-hills terrible. Consumer confidence is at its lowest level in almost 30 years. Only 12 percent of Americans think the economy is in good shape. On the Internet, comparisons to the Great Depression are widespread.
But the reality is different. According to most broad measures of how the economy is doing, it's not all that grim.
Soft? You betcha. In recession? Quite possibly. And a crisis in the financial markets has rattled nerves for months now. But so far, the economy is holding up better than it did during the last two recessions in 1990 and 2001. Employers haven't shed as many jobs, the unemployment rate is still relatively low, and gross domestic product has kept rising. Things are nowhere near as bad as they were in the Great Depression, or even during the severe recession of 1982-83. The last time consumers were this miserable, in May 1980, the jobless rate was 7.5 percent and inflation was 14.4 percent. Now those numbers are 5.5 percent and 4.2 percent respectively.
This paradox has created a unique challenge for those guiding the economy, who worry that Americans' pessimistic views will become a self-fulfilling prophecy. Two-thirds of the economy is consumer spending. So if people's negative outlook leads them to cut their spending, a steeper downturn could happen."
Comment
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Comment by Michael McCarthy on July 14, 2008 at 6:50pm -
Hey, I like that idea! ;)
I think you might be right. The media seem to thrive on finding the "next big story" in our hyper-competitive online and print environment. We've learned that hype sells. The good news is that most folks are reading newspapers any longer. The bad news? Their watching TV, especially 24-hour news networks like CNN...
We'll get out of the tailspin, and our magazine will continue to preach both the practical and dreamy side of building a modern classic: a log home.
Thanks for the response!
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Comment by Richard on July 14, 2008 at 6:38pm - I can't help but wonder what shape we would be in today, economy-wise, if the media hadn't spent the past 8 years bashing everything in order to hurt the administration. How many businesses, consumers, investors were lured into a feeling of doom and gloom and as a result, failed to thrive to the level they were really capable? I say cancel your newspaper subscriptions and subscribe only to Log Home Magazines!
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Comment by Scott Maentz on June 28, 2008 at 8:30am - Perception is reality. Even if the stats aren't so bad, the fact that people think it's bad determines their actions. People are staying close to home and scaling back vacation plans.
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Comment by Ted on June 24, 2008 at 6:47pm -
I too want to, have to, believe that a new administration will have a positive impact on our economy. We are a great nation and by that I mean a great nation of people. No matter how bad the administration, given enough time we tend to scratch our way out of the sand pit. this time it's a bit worse than other times but certainly not as bad as the depression. Just be realistic and don't expect a turn around the first week in January 2009. It ain't going to happen. We will be writing each other a year or so from now saying how terrific things are going and how wonderfully well the construction of our log homes is coming along.
Keep the faith.
Ted
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Comment by Laurie Sloan on June 20, 2008 at 10:34am -
I'm no Pollyanna, either, but I am a glass-half-full kind of gal and I want to share a little fun optimism that hit the news today: according to a British psychologist, today (June 20) is the 'happiest day of the year' - (yes, editors, I know a day can't technically be 'happy', but I'm just reporting here!)
apparently this academic came up with a formula to figure out the convergence of outdoor time, nature in bloom, social events, happy childhood summer memories, great weather and an upcoming holiday. He even has a mathematical formula. You could argue that it's neither scientific nor factual, but since we're talking about media influence here...
I do believe in self-fulfilling prophesies when it comes to large numbers of people, so I choose to think that fostering a better outlook (without ignoring reality, and making changes to adjust to that reality), is good for all of us in this 'downturn'. And, as Jackie points out, it's an election year and we've already seen that 'anything can happen'. Here's to an upturn in the outlook! Remember the 'chicken in every pot' goal? I say "a LOG HOME in every yard!"
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Comment by Jackie Hughes on June 20, 2008 at 8:21am - Sorry to be getting in on this discussion a bit late guys! However, couple all of the negatives mentioned above (depending on whether the your glass is half full or half empty, that is) and add to them the fact that IT'S AN ELECTION YEAR!! Hey, that pretty much sums things up quite nicely. The economy, of course, will turn around because people will spend and make it happen........but we'll have to get through this current round of politics first, don't you think?
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Comment by Michael McCarthy on June 18, 2008 at 9:35pm
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Thanks, Ted...
I wasn't being the Pollyanna and saying, "Hey, everything is fine!" I was merely showing that, in relative terms, the state of the U.S. economy isn't nearly as bad as the widespread perception.
Trust me, the high price of gas and other consumer goods hits close to home. I see it with my own family, naturally. But I also see with my folks, both of whom are retired and living on fixed incomes.
I suppose I should have added that I find it interesting how our daily bread, so to speak, can rise in cost and impact the collective psyche of a nation (fueled by the media, no less). We could get into a larger debate about our standard of living, circa 2008, and how it has changed in a couple generations (say, comparing the expectations of the Greatest Generation vs. the Boomers), but I'd rather go watch the College World Series (ESPN2, Miami vs. Stanford).
Have a great night!
Mike
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Comment by Ted on June 18, 2008 at 6:53pm
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I agree with you Michael, the numbers are better than they were in 1980 or even 1972 or any other year you want to compare them with. The true indicators though are not the numbers but how the economy impacts people on a day to day basis. It is painful to see older citizens having to choose between food and drugs or to be even more current, when the quickly dwindling middle class can't afford to drive to work in the family car because of fuel costs (still raising) or have to find food substitutes because basic foods like milk, bread and eggs are 30% higher than a year ago and jobs are leaving the country faster than you can say Mexico, China and India. Those are just some of the pains of out current state of the economy.
I apologize Michael but I see things a bit differently than you do. I am very hopeful that we will start seeing a turn around in 2009.
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