Oh man, I saw this op ed by Don Luskin linked by a recent Krugman post. (Well, it might have been from somebody Krugman linked.) I was annoyed with Krugman and the guy he was linking, but Luskin’s piece stole the show. At this point, let me just tell you that Luskin wrote this while George W. Bush was still in office. Check out some of these quotes:
“It was the worst of times, and it was the worst of times.”
I imagine that’s what Charles Dickens would conclude about the current condition of the U.S. economy, based on the relentless drumbeat of pessimism in the media and on the campaign trail….
It’s a virus — and it’s spreading. Do a Google News search for “since the Great Depression,” and you come up with more than 4,500 examples of the phrase’s use in just the past month.
But that doesn’t make any of it true. Things today just aren’t that bad. Sure, there are trouble spots in the economy…And unemployment figures are up a bit, too. None of this, however, is cause for depression — or exaggerated Depression comparisons.
Overall, the pessimists are up against an insurmountable reality: In the last reported quarter, the U.S. economy grew at an annual rate of 3.3 percent, adjusted for inflation. That’s virtually the same as the 3.4 percent average growth rate since — yes — the Great Depression.
Why, then, does the public appear to agree with the media? A recent Zogby poll shows that 66 percent of likely voters believe that “the entire world is either now locked in a global economic recession or soon will be.” Actually, that’s a major clue to what started this thought-contagion about everything being the worst it has been “since the Great Depression”: Politics.
So much for [candidate] Obama’s hyperbole about our terrible economy. But what about the media’s?
A housing “slump,” a housing “crisis”? A “severe” price decline? According to the latest report from the National Association of Realtors, the median price of an existing home is up 8.5 percent from the low of last February. And according to the U.S. Census Bureau, the median price of a new home is up 1.3 percent from the low of last December. Home prices may not be at all-time highs — and there are pockets of continuing decline in some urban areas — but overall they’ve clearly stopped going down and have started to recover. So why keep proclaiming a “crisis” after it’s over?
This would suggest that anyone who says we’re in a recession, or heading into one — especially the worst one since the Great Depression — is making up his own private definition of “recession.” And probably for his own political purposes.
Whatever the political outcome this year, hopefully this will prove to be yet another instance of that iron law of economics and markets: The sentiment of the majority is always wrong at key turning points. And the majority is plenty pessimistic right now. That suggests that we’re on the brink not of recession, but of accelerating prosperity.
Yikes! That’s pretty bad, right? Now for the kicker: Luskin’s piece ran in the Washington Post on September 14, 2008. The day before Lehman filed for bankruptcy.
One last thing: Now that you’ve read the above, just click on this. Come on now kids. Do you at least see why I continue on this thankless mission?
P.S. To cover myself from all accusations of hypocrisy, let me remind everyone that I stupidly pooh-poohed Peter Schiff’s warnings as late as January 2007. In my defense, that was a lot earlier than September 14, 2008.