Great News! The good life will soon return to America. Auspiciously, months before the holiday shopping season began, Americans were told that after more than a year of fiscal recession, or what some have characterized as akin to an economic depression, consumers were optimistic. The confidence index and other indicators were much improved. Manufacturing executives assured the public, the engine that drives the free enterprise system was in a "sustainable recovery mode." In the very near future, products, and people's sense of need, would be fabricated again. Everything will be right with the world, economically. Few feared the threat that, long ago, Americans had come to accept. The foundation of a democratic system had eroded in favor of consumption.
For the last week or so there has been a faint drumbeat of positive economic news. Consumer confidence ticked slightly higher in March, new home sales actually increased in February, durable goods orders have increased, inventories declined, and stocks rallied. Certain "market watchers" have told us to jump back into the stock market, the media is reporting signs of "economic hope", and Ben Bernanke talked about the economy's "green shoots", prompting an online debate about recovery hosted by The New York Times.
The response to this rather superficial positive news - after all, foreclosure activity increased again in February and the unemployment rate rose to 8.5% - was necessarily swift. Paul Krugman pointed to an increase in industrial production in 1931; Tyler Cowen warned about "suckers' rallies" and what will happen when Bernanke is eventually forced to hike interest rates; the new Baseline Scenario holds that "The one positive sign is that some forecasters are beginning to recognize that growth in 2010 is not a foregone conclusion"; at Vox EU economists plotted frightening graphs showing how the global downturn is in some ways worse than the Great Depression; and a gargantuan op-ed in the Wall Street Journal on Monday very chillingly sourced both the Great Depression and the current economic collapse to a consumer debt crash. In sum, the economic picture became worse for its comparison to the titillating glimmers of economic rebound.
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