"Commentary"-Optimism In An Ailing Economy
Monday, May 05, 2008SUZANNE PRATT: Tonight's commentator says it's not all negative for the U.S. economy. Here's Bernard Baumohl, director of the Economic Outlook Group.
BERNARD BAUMOHL, DIRECTOR, ECONOMIC OUTLOOK GROUP: We have been besieged lately with reports of how awful this economy is. Talk of recession is everywhere. Some people predict we're even headed for a double-dip recession. Then there are endless references comparing today's economy with the great depression. And if that is not enough to scare you, one economist went so far as to warn that the global economy may slip into a death spiral.
Does the dismal science have to be so dismal? Of course not. Here is some good news about the economy that misses the front page. First, any contemporary comparisons with the great depression is just nonsense. This economy is so unlike the 1930s, the two don't even rhyme. The unemployment rate rose back then to 25 percent, yet few experts see it surpassing 6 percent in the current downturn.
Looking for a glimmer of hope in housing? Consider this: the number of unsold new homes is now the lowest in three years. Moreover, a popular measure that combines mortgage rates, home prices and household income shows home affordability is the highest in more than five years. And check this out. Businesses outside of real estate and finance have stashed away half $1 trillion in cash and kept their inventories lean, which means by and large corporate America is in a better shape now than they were the last two recessions. Now, I don't know if any of this makes you feel a whole lot a better. But it is spring and I thought you just might want a reprieve from all this dreary economic news of late. I am Bernard Baumohl.
