Photo: M.V. Jantzen on flickr
A conclusion you can’t help but reach: Rising markets give people rose-tinted glasses about the economy.Not much has changed in the last 8 days, except that the market is way off its lows.
And now, suddenly, the recession doesn’t look so likely to people.
We wrote last weekend that the brewing new economic meme would be: Rising car sales and flat house sales would prevent the economy from going into recession.
And now that’s gone mainstream.
Here’s Neil Irwin in the Washington Post in a piece called The Simple maths Of Recession, in which he argues that many economic areas don’t have much room to fall.
It isn’t the resilience of the U.S. economy. Rather, it’s a sign of how bad things have already become. Many of the key sectors that usually cause economic contraction, including housing and durable goods such as automobiles, are already at such low levels that they don’t have much more room to fall.
“I continue to stick to my guns that we’re not going to fall backward into a recession,” said David Crowe, the chief economist at the National Association of Home Builders. “It’s just hard to figure out how you can get much lower than we are already.”
Bear in mind that none of this car/housing sales stuff is remotely new, but it’s the rising market that opens people’s eyes to what’s there. Economists are now furiously raising their GDP forecasts to catch up to reality.
For more on why people are getting bullish again, see here.