"Ailing Economy"? What Ailing Economy?
In "Wall St. Sees Silver Lining," new Times economics reporter Peter Goodman (formerly of the Washington Post), made Saturday's front page with a "news analysis" that managed to put last week's stock market rally in the context of an "ailing economy" "imperiled by the crumbling housing market."
(Just last Sunday, Goodman wrote the lead story in the Week in Review, which featured the ominous graphic of a red sinking RECE$$ION sinking below the horizon, Titanic-style. That despite the fact that at absolute minimum the U.S. istwo quarters away from a recession, the definition of a recession being two consecutive quarters of negative Gross Domestic Product growth. Third quarter GDP was a robust 4.9%, the fastest growthin four years.)
This Saturday, Goodman wrote:
"As Wall Street rallied this week, it seemed that investors were taking comfort in the notion that the economy had become so imperiled by the crumbling housing market that it was forcing the government to finally mount an aggressive rescue effort."
"But even as investors took heart in palpable signs that the government was preparing to dole out more medicine for the ailing economy, a number of economists cautioned that the pain itself was still unfolding, with its ultimate magnitude far from known.
"Signs point to a slowdown in the creation of jobs and investments by companies. Consumers are clutching their wallets more tightly. Banks are denying loans to many businesses, unwilling to bet scarce capital in a time of risk and uncertainty. A glut of unsold homes keeps prices falling and the construction industry in distress."
"There are plenty of reasons, of course, to count on the economy's inherent countervailing forces to ultimately help restore it to health. Lower interest rates should indeed spur more economic activity. A falling dollar has helped spur American exports and curb imports, contributing to a narrower trade deficit. And if the banks really do sign on to the deal the Bush administration is pushing to keep lower rates in place for subprime mortgages, that should keep a lot of people from losing their homes.
"Yet many of the forces gnawing at the economy remain in place, and actually appear to be intensifying. The trajectory was reinforced by data released yesterday, which showed that Americans now have less money in their pockets and are less inclined to spend.
"Personal income grew at a seasonally adjusted rate of 0.2 percent in October compared with September, the Commerce Department reported. That was only half the rate expected. Consumption grew a paltry 0.2 percent, dropping from the 0.3 percent increase registered in September. Construction spending plummeted at double the anticipated pace.
"Perhaps more ominously, a government report released yesterday suggested that the number of jobs created in the spring was far smaller than previously assumed."
With inflation still under control, the unemployment rate near a historic low and even oil prices coming down a little, the Times is apparently reduced to searching for killer whales on the horizon.