Sunday, February 5, 2012

Sunday Question for Liberals

Are you optimistic or pessimistic about the economy right now?
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Posted by Jonathan Bernstein at 3:02 PM
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16 comments:

  1. BillFebruary 5, 2012 at 3:07 PM

    Pessimistic, because I think the fledgling American recovery is going to be killed by either European collapse and/or a spike in the price of oil caused by an Israeli or American attack on Iran.

    Also, I'm just a pessimist.

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  2. AnonymousFebruary 5, 2012 at 3:07 PM

    Less pessimistic than I was in August

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  3. Bullied PulpitFebruary 5, 2012 at 3:11 PM

    I'm cautiously optimistic. The numbers look like they're trending in the right direction and the Fed has sounded a tad more dovish lately, making me more confident that they won't choke off a recovery at the first sign of inflation.

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  4. PA PoliticoFebruary 5, 2012 at 3:20 PM

    Definitely waiting and seeing. I'm happy about the recent good news but not getting expectations too high. I have to say though, that predictions of an imminent economic disaster in Europe rippling over here have so far been wrong. I'm starting to wonder if things are more under control over there than we are led to believe over here.

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    1. PFFebruary 5, 2012 at 4:53 PM

      You may be right. They certainly have gotten good at finding innovative, new ways to kick the can down the road. However, they haven't actually made any progress in solving the politics or economics of their situation, even behind the scenes. The US hasn't quite *solved* any underlying problems either, but they've at least made some progress.

      By contrast, Europe: has entered a recession, has reached no new political consensus on relevant fiscal measures for growth, has allowed unemployment to continue to increase, has failed to recapitalize banks that were *much* more leveraged than those of the US, and has postponed rather than carried out successful debt re-structurings with key peripheral countries. The only thing it has done is get the ECB to provide sufficient liquidity for the time being, preventing an imminent credit crunch. Not nothing, but not much.

      So it remains a ticking time bomb, rather than a time bomb which is being slowly and effectively defused. The optimist's case would be that things are sufficiently under control, such that nothing alarming will hopefully happen before December. But evidence still points to something alarming happening eventually.

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  5. longwalkdownlyndaleFebruary 5, 2012 at 3:57 PM

    More optimistic than a few months ago. My new fear is that that wingnut in texas and some others in the Federal Reserve will announce the economy is “overheating” and demand a huge raise in interest rates to stop the inflation menace.

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  6. DamnedLiberalFebruary 5, 2012 at 4:00 PM

    Leaning toward pessimistic. Europe is far from stable & could tip. The rich & corporations are doing well, sitting on piles of cash, but "trickle down" doesn't work and I don't see any change in the status quo for the working class for the foreseeable future. I see years of stagnation. While the last employment news was good, one month does not make a trend.

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  7. Ron E.February 5, 2012 at 5:07 PM

    I'm more optimistic now than I've been since the crisis began in 2008, but there remains a good chance that one or more of Europe, an oil price shock, or the GOP Congress (recent reports say another debt ceiling hike will be required this year) will kill the recovery.

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  8. kthFebruary 5, 2012 at 6:23 PM

    Optimistic: even in the economic pre-historic era before the Great Depression, recessions eventually ran their course.

    To the extent that I care, anyway: long term, the most pressing problem is to persuade relatively-affluent people to live sustainably (or, what is really the same thing, to accept a political regime that forces them to, since they own the process anyway), not to get them to buy more junk and throw it away.

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  9. TybaltFebruary 5, 2012 at 7:22 PM

    I was pessimistic until the release of the jobs report. That brought forth a torrent of discussion and e-mail from people I know in private companies and private equity, complaining bitterly about the good numbers and accusing each other of lying about hiring freezes and the like. A lot of discussion ensued.

    While there was no consensus, there was a lot of discussion about the things various people were doing to hold off on economic activity - new projects, new capital expenditures, new hiring - until November 7th. There seems to be a concerted effort to brake the economy, on the part of corporate managers, until after the election. What we've seen over the past few months is the re-energizing of optimism on behalf of the public. I think that managerial capitalists are trying hard to break that confidence, and I think they will succeed better than I could have thought possible.

    It's a depressing thought, and the economy here in Canada I was optimistic about, but we're tied in enough, and there is enough resolve to bust Obama's hand, that I think it has a better than even chance of succeeding - the existing optimism is fragile.

    It's a depressing thought in some ways, but then again we could see a strong recovery in 2013 as a result. Any such recovery would probably be temporary; I think people are closer than they realize to breaking the system.

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  10. TybaltFebruary 5, 2012 at 7:26 PM

    The other thing I see, and this is more anecdata although it's backed by analysis, is what DamnedLiberal indicated: everyone is sitting on piles of cash, damming cash within their enterprises despite low prices. So while I think there is a good possibility of strong recovery in 2013, the knock-on effect of a concerted effort to brake the recovery that had been in progress isn't knowable.

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  11. JazzbumpaFebruary 5, 2012 at 9:23 PM

    I'm cautiously pessimistic. I hope enough cans get kicked down enough roads that B. Hoover Obama can get a 2nd term. I think whichever side gets the presidency will probably control both houses of congress - well, one of them for sure.

    A Republican win would be devastating. We're on our way to the new corporate feudalism anyway, and an R win would seal the deal with the devil.

    The really big item at stake is supreme court appointments. One more Scalia clone, and we're back to Dred Scott.

    JzB

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  12. zicFebruary 5, 2012 at 9:46 PM

    Yes; I'm optimistic the economy will slowly recover.

    And I'm pessimistic that a recovery will include many of the folk tossed to an economic crossroad by the recession; I think 20-somethings who should be working after college may never find their footing, a lost decade. And the 50-somethings hurt through job loss are going to be asked to work longer, pay more of their health care.

    That's my children and their peers, and me and mine. Two generations likely to suffer irreparable harm from Wall St. greed, unfunded wars, inability to tackle spiraling health-care costs and Bush's tax cuts for the rich.

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  13. PJRFebruary 5, 2012 at 9:49 PM

    Increasingly optimistic. Businesses soon will realize they need to jump on the train, and that the GOP will be nominating a weak candidate who is unlikely to win.

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  14. Neil SinhababuFebruary 5, 2012 at 11:57 PM

    Optimistic!

    Regarding Europe-related concerns, Draghi is a lot better than Trichet. He's trying to find politically feasible ways to stabilize Europe. For example, the ECB is getting around the political problems with directly loaning to the afflicted countries by loaning money to banks and accepting afflicted countries' bonds as collateral for the loans.

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  15. Matt JarvisFebruary 6, 2012 at 12:15 AM

    I like to think of myself as realistic!
    I've long been convinced (by others, I can make no claim to developing this notion) that this whole thing was going to be U-shaped. I must say that the way down was not quite as steep as predicted, and the bottom seems slightly higher as well.
    I would guess that we'll see more middling reports, some up, some down, for another bunch of months. My guess is still more like summer 2013 before most people start thinking times are good again.
    Note, however, that I've been much more focused on housing than the economy as a whole over the last 4 years, so I could very easily have conflated the two in my mind's tale.

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