One particularly vitriolic reader of my last article on The Distorted Shape of the Recovering Economy seemed to think I was predicting a doomsday scenario. I was not at all. Richard Duncan’s tentatively predicted Fall of Rome scenario is a true doomsday scenario, not mine.
My focus of late has been much more on the need for transparency and candor from our government on TARP I and II and the stimulus program results, as well as, more importantly, on getting the stimulus infrastructure program facilitated, expanded and working much better. The Administration needs to confess errors, fix them and get on with things.
Meanwhile, there are some signs of life in our economy and they should not be overlooked or ignored. I am not arguing we will have a robust recovery. I am arguing we will not have a depression and things will pick up, just more slowly than we would like and in the face of more risk, such as much higher oil prices, than we would like. Also, with more unemployment than we would prefer.
Consider these improvements:
-- The Baltic Dry Index is up
-- Multinationals and related companies are improving fast
-- The U.S. share of world GDP is staying about constant
-- With exceptions, the world economy is improving well
-- The rate of new jobless claims is dropping steadily
-- The housing market is tending to bottom
-- New housing starts are up in many areas
-- The U.S. private sector is slowly getting deleveraged
-- Oil prices could be a lot worse
-- Leading economic indicators (LEI)are on the rise
-- Soros and Buffett are buying, e.g., Wal-Mart (WMT)
-- U.S. exports are picking up
-- Big TARP banks are doing better
-- The velocity of money is improving
-- Inflation and deflation are under decent control
-- GDP growth, while small last quarter, was not negative
-- The dollar is not in freefall
-- Our debt-to-GDP ratio is not at all bad, contrary to popular belief
-- Most economists do not believe a depression is very likely
-- Price earnings ratios of large cap stocks are at a discount
-- We are economically better off than we were a year ago
-- Credit availabilty, while not good, is not frozen as it was
-- The retail sector is doing better, according to the NBER
-- Government will have paid-back TARP moneys to use soon
Without dwelling on or developing these points, but by simply listing them, I want to make clear that, in my view, we are not heading for a depression and we are not heading for a doomsday scenario. To be sure, we have buckets of trouble, but it is all in the framework of a slow, troubled recovery with excessive unemployment tenaciously hanging on.
With a good, cleaned-up and expanded infrastructure rebuilding program that is legally facilitated, made more labor intensive and well administered, we can attack the unemployment program directly and help improve our infrastructure for the future recovery at the same time.
We need to take heart, fix things and get busy.