Victor Davis Hanson says what I’ve been thinking about the economy, and about panics and pessimism in general:
Get a grip. Much of our current panic is psychological, and hyped by instantaneous electronic communications and second-by-second 24-hour news blasts. There has not been a nationwide plague that felled our workers. No earthquake has destroyed American infrastructure. The material United States before the September 2008 financial panic is largely the same as the one after. Once we tighten our belts and pay off the debts run up by Wall Street speculators and millions of borrowers who walked away from what they owed others — and we can do this in a $13 trillion annual economy — sanity will return.
Gas, now below $2 a gallon, is still falling — saving Americans hundreds of billions of dollars. As housing prices settle, millions of young Americans will buy homes that just recently were said to be out of reach of a new generation.
If it was once considered a sign of economic robustness that homes doubled in value in just a few years, why is it seen as a disaster that they now sell on the way down for what they did recently on the way up? If we were recently terrified that gas would reach $5 a gallon, why do we now just shrug that it might fall to $1.50?
Unemployment is still below 7 percent; it was around 25 percent when Franklin Roosevelt became president. Less than 20 banks have failed, not the 4,000 that went under in the first part of 1933.
There is no known use of the word “recession” that matches economic conditions like unemployment at 7%, gas prices falling more than 50% in 5 months, and Black Friday numbers higher than last year:
CHICAGO – The holiday shopping season got off to a surprisingly solid start, according to data released Saturday by a research firm. But the sales boost during the post-Thanksgiving shopathon came at the expense of profits as the nation’s retailers had to slash prices to attract the crowds in a season that is expected to be the weakest in decades.
Sales during the day after Thanksgiving rose 3 percent to $10.6 billion, according to preliminary figures released Saturday by ShopperTrak RCT Corp., a Chicago-based research firm that tracks sales at more than 50,000 retail outlets. Last year, shoppers spent about $10.3 billion on the day after Thanksgiving, dubbed Black Friday because it was historically the sales-packed day when retailers would become profitable for the year.
But this year, many observers were expecting consumers to spend more time browsing than buying, amid contractions in consumer spending and growing fears about economic uncertainty and trouble in the global financial markets.
Did you catch all that framing and context?
A “surprisingly” solid start. But the higher sales came at the expense of reduced profits, so the news isn’t all that good, really. And if the retailers had left prices high, at the expense of sales, that would have been bad, too. Everything is wrong now, can’t you see?!
Retailers didn’t cut prices, they “slashed” them, because they are desperate. You need to worry more, pal.
And some “observers”, and maybe even some “experts”, claim that the season is expected to be the weakest in decades, due to contractions in consumer spending and growing fears about economic uncertainty and trouble in global financial markets.
Sure. Christmas shoppers at Target and Wal-Mart are always worried about “global financial markets”.
Call me crazy, but I think people pretty much look at their own financial situation, and their own bank balances, and plan accordingly. Which, at least for right now, pretty much means people aren’t all that worried.