Paul Krugman has a new column up with the dreary title: Things Are Not OK.The gist is simple enough: Despite the good employment report, things are still pretty horrible (in that we’re very far from full employment) and yet because of the way politics are these days, there’s a good chance that the good news will cause people to jump too fast towards austerity and monetary tightening.
All that being said, this paragraph presents what is probably the clearest bull argument for the economy there is.
…it’s not hard to see how this recovery could become self-sustaining. In particular, at this point America is seriously under-housed by historical standards, because we’ve built very few houses in the six years since the housing bubble popped. The main thing standing in the way of a housing bounce-back is a sharp fall in household formation — econospeak for lots of young adults living with their parents because they can’t afford to move out. Let enough Americans find jobs and get homes of their own, and housing, which got us into this slump, could start to power us out.
This really encapsulates a lot of the ideas we’ve been talking about since last fall, when people really started thinking that things were going to hell in a handbasket again.
There’s a lot of pent up demand for stuff like housing and cars, and if you started getting the employment ball rolling, then you could seriously see a comeback in these areas.