Economy Refuses to Tank. Bears Weep

Irrational Exuberance

I think this article makes it clear that the author's knowledge of economic fundamentals is severely lacking.

Comparing jobs data from the previous recession yields little to no insight into the current environment for many reasons, not least of which include:

1) Since 2001-02 recession we've experienced a "jobless recovery," indicating that US labor markets have remained closer to their equilibrium while economic growth (GDP) has improved (likely due to productivity increases and consumer-focused tax cuts)

2) The US economy has continued its transition from a manufacturing economy to a service sector economy, completely skewing the validity of jobs data in contributing to a determination of economic strength. This is largely because productivity is more important to economic growth than simply counting the number of jobs (or lack thereof). Therefore, while we may be currently losing less jobs overall than in the previous recession, the jobs now being cut may have a greater impact on productivity (right now there are many high-skill, high-paying, and probably high-productivity jobs being cut).

Oh, and nevermind the fact that equity markets and the dollar have not yet begun to accurately price in the full effect of bank losses and credit market tightening.

Mr. Pethokoukis should probably stick to Soviet politics and American history.

Mises of PA @ May 05, 2008 15:08:36 PM

housing

maybe you can educate me. The housing bubble has burst and the myth that owning a house equals good investment is gone and it will never come back.

most of the new demand in the future would have to come from immigration but that is tight and broken as ever. so where will the new demand for houses come from ??

sam of GA @ May 05, 2008 14:38:00 PM