Attention Voters: US Economy Clearly Rebounding

This journal tends toward skepticism, or as its critics might put it, pessimism. However, intellectual honesty demands that when facts supporting an optimistic outlook arise, and they hold up to scrutiny, then popping champagne corks is in order. So, it is with the American economy. The indicators all appear bright green, and someday, the public will realize it.

One must start with the jobless situation, as that is where Main Street feels the pain of economic failure the most. In January 2009, the US economy shed 779,000 jobs. Considering that in 2008 Indianapolis had a total population of 798,382, that is a ridiculously huge number. Last month, the loss was 36,000. The gloom-and-doom crowd complains that the nation is still losing jobs. True, but it isn't going to go from losing three-quarters of a million one month to adding 100,000 the next. Business leaders may be a bit crazy, but behavior such as that is beyond the pale. The trend must decelerate before it can reverse itself. Some analysts believe the March figures, due out April 2, will show in increase of 100,000 to 300,000.

Looking at the stock market, one finds that the equities have strengthened radically by just about any measure. The Dow Jones Industrial Average closed at 6,594.44 on March 9, 2009. Exactly a year later, it closed at 10,564.38. The benchmark S&P 500 finished March 9, 2009, at 676.53, and closed yesterday at 1,140.45. The Russell 2000, which covers smaller-sized companies, has almost doubled, going from 343.26 on March 9, 2009, to 669.63 yesterday.

Other financial indicators look promising as well. According to Barclays Capital, the spread on corporate bonds has narrowed significantly since Mr. Obama took the oath of office, falling from 5.13 percentage points to 1.63 percentage points. A 30-year mortgage got cheaper during that time too, falling from 5.20% to 5.03%. Commodities have surged reflecting greater demand. Even in the housing market, which has been at the heart of all this misery, one finds that the median price of an existing home in the US was stable between January 2009 and January 2010.

The federal budget deficit has reached $1.5 trillion, and in 2011 will be $1.3 trillion, and that scares the bejesus out of some people. However, there are three facts that make this less troubling. First, the US economy is $14.4 trillion or so, meaning this deficit can be financed in the short and medium terms. Second, the dollar remains the sole reserve currency thanks to the Greeks and other nations that fibbed their way into the eurozone. Third, unlike individual human beings, nations needn't pay off their debts in full, merely have sufficient funds to service them. Countries don't retire to Florida on a fixed income, so they have no financial end game. The budget deficit is big in nominal standards, but so long as the US can manage to shrink it in the long term (think decades), the problem is manageable.

Shouldn't someone tell the voters?

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