I recently read an article in the Washington Post by Neil Irvin outlining 5 reasons to stay upbeat about the economy.
1. A steep rise in imports has drug down the economy. With many world economies doing better that the US exports may be set to rise above that of imports in the coming quarters which will improve domestic growth.
2. Housing starts fell from a 2.3 million annual rate in early 2006 to a low of 477,000 in April 2009. We are up to a paltry 546,000 annual rate, less than half of what is needed to keep up with population growth. It won’t bounce back but mathematically it has to.
3. The industrial sector is actually holding up. July industrial production was up 1% and early indicators are showing continued growth. Augusts manufacturing index rose to 56.3, any number over 50 indicates expansion.
4. Credit standards have eased making loans to households and businesses more accessible. I know, some of you are thinking isn’t this the root of the problem? After the bottom fell out of the banking industry only the A+ buyers and businesses could get credit, the banks went too far in the opposite direction leaving many responsible credit-worthy people out in the cold. This included businesses that relied on credit lines to run their businesses as they had for decades using their credit responsibly. By the way I don’t think this was the root of the problem – I think the root was greed on many, many levels.
5. The rate of savings has risen from 2.7% at the start of the recession to 5.9% in July. This means households are further along in readjusting their spending patterns to match their incomes than was previously realized.
I have added a 6th reason to the list which I feel is sorely missed. I think gratitude and a realization of what is important in our lives is slowly shaping the way many people live their lives. Wants are being replaced with gratitude for what we have. Sure, I like many would like to have a newer car, new lap top, new clothes but I feel this sense of peace in the appreciation that I have a car that is old yet dependable, a computer that still chugs along, a roof over my head and food on the table but most importantly is the love of my family and friends, really what more do I really need.
My hope is that Americans will not go back to living beyond their means, using their homes as an ATM, buying whatever they fancy at the moment like there is no tomorrow or that tomorrow will somehow just take care of itself. I hope we have learned some lessons during these past 2 years, most importantly it really isn’t ‘stuff’ that will make us happy. Families are discovering what matters is its members not their toys. I hope this rediscovery will stay with us for many years to come as the economy recovers for it will.
As Nietzsche so aptly said “What doesn’t kill us makes us stronger.” Here is to keeping life in perspective!