Six Years of Economic Growth:
Just a Dream?
Until someone comes up with a better name for The Financial Melt-Down of 2008 (how about, "The Financial Melt-Down of 2008"?), I have my own suggestion: "The Bob Newhart Economy."
Just like the sitcom's famous last episode revealed, much of what happened in the U.S. economy since 2002 is starting to appear like a collective dream.
Consider where we were then, compared with where we are now (or appear to be headed quickly):
U.S. home prices then (national ave.): $150k
U.S. home prices now (national ave.): $150k
Gas prices then: $2 a gallon
Gas prices now: $2 a gallon
S&P 500 then: 1,000
S&P 500 now: 1,000
Biggest economic bogey then: deflation
Biggest economic bogey now: deflation
If all we really did was end up where we started (but for ballooning U.S. and individual debt), why is everyone so manifestly worse for wear?
Maybe because it really is true that, "it's not the destination that matters, it's the path."
Saturday, November 1, 2008
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3 comments:
The profound difference between then and now is the level of public and private debt. In 2002 consumers had access and expectations of continued access to virtually limitless credit (government too, I guess). Now the consumer is tapped out -- having to rely on whatever expectations he has about his future prospects for sustaining his income.
If our economy was based on loose credit and reckless spending, then change is indeed needed. It’s time to build houses out of brick instead of straw.
If you're looking at retirement and finding your 401K is back where it was five years ago (and still dropping), I suspect you would not be happy.
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