Luskin: There’s No Recession, and Those Who Say So Are Slowing Things Down
From Don Luskin’s Friday Smart Money column:
The economy isn’t falling into recession. Retail sales are just fine — the supposedly horrible numbers for December look pretty much like the kind of numbers you get every couple months in the normal ebb and flow of a growing economy. We still haven’t had any negative jobs growth. The unemployment rate is now 10% lower than the historical average for economic expansions. Jobless claims are at the low end of the range of the last several years. S&P 500 forward earnings, outside the financial sector, are at all-time highs. Some credit markets are in disarray, but bank lending is operating at very near all-time highs. Damaged credit markets, such as the market for asset-backed commercial paper, have been steadily recovering from the summer crisis.
Fine — the housing market is in the gutter. But it has been for two years now, and so far it hasn’t substantially affected the rest of the economy at all. In fact, since the housing slump started, the rest of the economy has had its best period since this economic expansion began in 2001.
To put it another way, I think the permabears and the politicians who’ve been saying literally for years that America is heading for a recession, or already in one, have basically just gotten lucky here. Their broken clock is finally right. Stocks haven’t fallen because of all the crazy stuff they’ve been fear-mongering about all this time. If anything, these people have contributed to the atmosphere of fear that’s feeding the panic we’re in. That’s not being right — that’s being an arsonist.
Luskin should have added the business press as a named party to the flame-throwing.
I would add that December’s retail numbers may have been affected more by the use of gift cards than the estimators think (gift card purchases are not considered sales until the gift cards are used). If so, January’s retail numbers may have an upside “surprise” in store.
