Commentary

The Economy: Not Dead Yet!- by Greg Strid

The economy is not dead yet! The Commerce Department
reported that the U.S. glowed under the warm light created
by 3.3 percent real economic growth in the second quarter.
This new reading almost doubles the original tally of 1.9
percent- which provided barely enough wattage to read
the fine print on mortgage, credit card and auto loan
statements.

According to Marketwatch.com, the jolt to the economy’s vital
signs stemmed from robust exports and hefty inventory
accumulation. (Uncle Sam’s stimulus package- complements of
China and various oil exporting autocracies- helped as well.)

The American economy, once the object of envy and grudging
admiration, has been struggling since the fourth quarter of 2007.
Real economic growth over the past year reads an anemic,
European-style 2.2 percent. This marks a drastic slowdown from
the credit-fueled growth in the second and third quarters of last
year (the website Data360 has a nice graph of recent
GDP activity).

Marketwatch also surveyed practitioners of the dismal science
(a.k.a. economists). It seems that they underestimated the
strength of the U.S. economy in the second quarter, but they
are still very pessimistic about the second half of this year.
They expect growth to skid toward 2 percent for the current
quarter and to practically vanish as the year comes to a close
(a meager 0.3 percent increase is expected for the fourth
quarter).

I find that I agree with this dour assessment. The easy
money that created the fire to keep American growth sizzling
is now a pile of smoldering embers. The banks are not through
confessing their misdeeds, consumers are beyond tapped out,
and the housing market is limping toward the valley of shame
(where it will rent a modest dwelling). The recent rise in the
dollar will hit exports in the current quarter and, last but
certainly not least, Uncle Sammy will not be borrowing
money to send his spoiled nieces and nephews to the mall
anytime soon.

©Greg Strid 2008

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