Contrary to Popular Opinion, the Economy Has Not Flipped into a Ditch Says SF Fed
Words of wisdom from my least favorite Fed bank.
The U.S. economy’s “rough patch” in recent months, caused in part by weaker consumer confidence and spending, isn’t the start of a sustained slide back into a recession, said John Williams, research director for the Federal Reserve Bank of San Francisco.
“Recent economic data have been disappointing and there’s no denying that the economy has hit a bit of a rough patch,” Williams, 48, said in the text of a speech today in Portland. “Although discouraging, the recent softness in the economic data looks much more like a bump in the road” than “a swerve into the ditch.”
Rough, choppy tomato to-mah-to.
The solution (beyond government initiatives to capitalize on Keynesian rules that say $1 of investment = $3 in new money) is for America to squeeze out more kids and keep buying unnecessary crap like iPads. Seriously.
Of course, eventually, housing, commercial real estate, and other hard-hit sectors will return. After all, the population of the United States grows by over 2½ million people a year and those people need roofs over their heads. And all of those old cars and washing machines will eventually start looking pretty creaky compared with the snazzy stuff in the showrooms. We’ve already seen just this process take place in technology where both consumers and businesses have overcome their hesitation to buy the latest gear. I don’t know how much confidence it takes to buy an iPad or an iPhone, but whatever it is, millions of people obviously have it.
Hey has anyone thought that maybe instead of forcing themselves into new homes they can't afford Americans have been so shaken by recent events that they'll cram as many folks as they can in the tiny house they already have and forgo a Ford that will die in 5 years for a Toyota that might go 300,000 miles without needing to be replaced? Just sayin.
Full text of Williams' remarks may be found via the San Francisco Fed here.