Are the Good Times Really Over—for Good?
This is the most downbeat thing I read today. From the Wall Street Journal:
"We have to accept that this is no longer a nation of 4% real economic growth. This is a mature nation that no longer has a strong manufacturing base," says Steve Leuthold, chairman of Leuthold Weeden Research in Minneapolis.
My take: The last time I heard this talk was back in the mid-'90s, right before the economy turned on the jets. Back then, the common wisdom was that the economy could grow no faster than 2.5 percent a year or so. Here is a bit from a 1996 New York Times story on the topic:
History and circumstance, in sum, have locked the United States into a level of economic growth that, measured against expectations raised by the 1996 Presidential campaign, is politically unacceptable. "It might be good for our politics if some candidates acknowledged this," said William Kristol, editor of the Weekly Standard and a Republican strategist, addressing an issue that most politicians don't, in public.
I might buy into this theory today if it looked to me that the U.S. economy was already optimized for speed. But it clearly isn't, not with the second-highest corporate tax rate in the world, for instance, or a healthcare system that is a terrible burden on employers. Now is no time to give up on growth.
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Are The Good Times Really Over For Good?
James--Apparently, the fact that manufacturing revenues are higher than ever equates to a phantom manufacturing base in Leuthold's world. Not mine.
He's right on one thing though. We are a mature nation, at least economically speaking. And, when you have a $14 trillion GDP, you're not likely to have 4% real growth year after year. But, even at 2% real growth we produce as much new GDP as the total GDP output of a country the size of Hong Kong or Algeria or Norway.
When we were in the depths of the 1990-91 recession who would have thought that we were on the verge of enormous economic growth, not to mention the development of the Internet, WWW and entire new industries. IMO, the best is yet to come.
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Stocks would make bad investment as long as the Republican party continues to behave like the Democrats and the Democrats continue to move further to the left. Our politicians in both parties are behaving irresponsibly and destroying this great country. This plus an activist Fed, who would want to own stocks in this kind of environment?
Mar 26, 2008 20:19:10 PM [permalink] [report comment]