Freezing in NH

Good Times, Bad Mood says that we’re really in a good economy (unemployment at 4.5%, stock market high, inflation low) but we seem to be in a funk anyway.

One reason is that we’ve gotten so accustomed to prosperity that we take it for granted. From 1971 through 1997, the unemployment rate never once fell to the level we now enjoy. In the 1970s, annual inflation was frequently in double-digits. Recessions used to come along every four or five years, but since 1991, we’ve had only one downturn, a mild one back in 2001.

Another reason for the pessimism is that we mistake the few bad indicators for a broad trend. When gas prices soar, it’s tempting to conclude that we’re on the verge of economic turmoil so awful that we will soon be eating tree bark to stay alive. Never mind that other prices are reasonably stable, and that the national economy has absorbed higher fuel costs without too much strain.

In one sector where prices have been dropping, of course, the trend is taken as cause for panic: home sales. But what is bad for home sellers is good for home buyers. Most of us are both, which makes the whole phenomenon pretty much a wash.

This entry was posted on Thursday, June 28th, 2007 at 7:09 am and is filed under articles. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.