Transcripts

"Commentary"-The Half Empty Economy

SUZANNE PRATT: In tonight's commentary, when it comes to the economy, why it feels to many like the glass is half empty. Here's Mark Zandi, chief economist at Moody's Economy.com.

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ECONOMY.COM: How bad is it, really? Nearly everyone, save for some economists and a few policymakers, believes we are in a recession. Surveys of consumer confidence show that people are as pessimistic as they have been since the early 1980s, when unemployment and inflation were well into the double digits. Today, unemployment is 5.5 percent and consumer price inflation is 4 percent. So why do people feel so crummy about the economy and should they? Part of the reason is probably Iraq. It colors our perceptions of everything. Conditions are seemingly getting better, but we all thought we would have been out of there by now. Part of the reason is the media. There is lots of it, from traditional newspapers to Internet blogs and the bad news gets amplified. The most important reason, for many of us our economic lives are indeed about as tough as we can remember. The average American household is worth much less given evaporating house prices and declining stock values. Millions of households are losing their homes in foreclosure. Debt loads, including payments on credit cards, auto loans and student loans, have never been weightier and the average American household's purchasing power is falling. Given $4 plus for a gallon of gasoline, inflation is rising faster than most peoples' incomes. There are very good reasons to not like the way things are going; they aren't going well. We must all buckle down in managing our own personal finances and we must demand that policymakers do the same with the nations' collective finances. This is Mark Zandi.