Posted by Larry Hoover on July 6, 2008, at 10:29:08 [reposted on July 6, 2008, at 13:10:45 | original URL]
In reply to Anyone Else Starting To Fear The Economy?, posted by Phillipa on June 29, 2008, at 12:33:07
I'm a little slow to enter in, eh? Better late than never.
I'm not too concerned about the economy, in general. For example, manufacturing output in the U.S. rose in May (last stats available), after four months of decline. The fall in the U.S. dollar against other world currencies has made American output cheaper. Exports are increasing steadily, improving the trade balance. Yes, consumer confidence is down, at the lowest it's been since ~1990, but consumer confidence hits a bottom *after* the economic recovery has already begun. It lags the performance of the economy itself.
Because many basic commodities are denominated in U.S. dollars, the U.S. is taking a double whammy. Relative to other major economies, the percentage increase in some commodities is the highest. But the American economy is still the leader in many high technology areas, and I can't see that changing any time soon. The economic pressures will simply force a faster pace of adaptation, and the next increment in high tech arising therefrom will push the U.S. back up again. I think that's already begun.
Yes, the stock market (DJIA) is down 20%, but I don't find that to be a relevant indicator of anything, other than it's a good time to buy. There's still a huge amount of cash (world-wide, I mean) chasing after investment opportunities, despite the credit crunch. When fear leaves the market, as it always does, consumer confidence will return again.
I feel for people who got stuck with houses and mortgages that they couldn't afford. But look at oil-dependent cities like Calgary or Houston. There are times when you can pick up a property at 10-20 cents on the dollar, but things always turn around. I remember when people were buying houses in Texas to tear down for the materials they were made up of, being cheaper than buying new construction materials. Not any more, they're not. People are way too resilient to stay mired for very long.
Lar
poster:Larry Hoover
thread:838387
URL: http://www.dr-bob.org/babble/poli/20080312/msgs/838424.html