The Fed says the recession is almost over. Many leading economists now say it has already ended. You hear this latter view on TV nightly, and if you visit financial web sites, it’s repeated over and over. All of which brings to my mind a simple question: Whose recession has ended—or is even ending?
Imagine an emergency room. Six months ago a patient was brought in. He was bleeding very badly and required endless transfusions. He had a dozen broken bones in all parts of his body and tumors that were were beginning to spread. Six months later, while still in intensive care, his doctors come out and inform family and friends that the patient is cured—or almost cured. He still needs endless transfusions, more of his bones are broken than when he entered the hospital, his tumors have spread to many other parts of his body. Indeed, the only real “improvement” in the patient’s condition is that he now has a raging fever brought on by the happy talk his doctors have been whispering in his ear.
That patient in the U.S. economy, whose recession, we are being told by so many experts, is ending or has ended.
You can go crazy lisening to the financial news these days. Its divided into two very distinct elements. One part is the recession-is-over jabber. The other consists of reports about what’s really happening in the economy.
Forget the jabber for a moment. Here’s what’s actually been reported in just the last few days
New job loses increased a “mere” 227,000 last month—but only because another 422,000 Americans stopped looking for work which lowered the total. Home prices continue to fall, falling a record amount in the last quarter. Foreclosures are still rising and are at truly scary levels. We are now looking at 1.4 million bankruptcies this year, which will not be a record only because a bankruptcy law passed by Congress a few years ago at the behest of banks makes it harder than it used to be. Our national trade imbalance is on the rise again. Local government fiscal problems are threatening many basic services around the nation. The huge increase in productivity just reported (up more than 6 percent) was due to the fact that workers are working longer and harder for pay that hasn’t been increasing at all. Thousands of Americans now queue up in parking lots overnight in hopes of getting some free medical care they can’t otherwise afford. The stock market’s rise has largely been fueled by companies beating expectations, which they have usually accomplished only by laying off workers and selling assets. Oh yes, the federal budget deficit now stands at $1.3 trillion for the present fiscal year which still has two months to run. And on and on…
I have been writing about the huge schism between official pronouncements and actual facts for months. But what’s the point? What is, is. And if my view of the economy is dead wrong, no one will be happier about that than me.