This week I offer a rather narrow range of choice of scenarios:
gloomy, gloomier, and gloomiest, leavened only with a brighter after
thought. The merely gloomy forecasts anticipate unsatisfactory growth
but no recession. Analysts of this view advance three arguments.
First,
we are living through still another summer of our discontent, those
months in which the growth engine of the U.S. economy inexplicably takes
a vacation before returning to work. Second, there are signs of
strength in the economy. The housing sector seems to be recovering,
although with stumbles along the way. Good earnings reports from such as
Boeing and Caterpillar prove that there are some signs of bright amid
corporate gloom. Led by such stellar performers, it is not beyond
imagining that the economy will bumble along, growing at 2 percent later
this year and into 2013.
Third, the monetary policy gurus at the Federal
Reserve Board are sufficiently disturbed by weakness in the jobs market
to give the economy another boost. Fed chairman Ben Bernanke will reach
into his bag of tricks and announce new stimulative measures –
“additional steps” is his preferred language – if not at the meeting of
the Fed’s monetary policy committee next week, then at the August
conclave of central bankers in Jackson Hole.
Since none of this makes much dent in unemployment,
and since Europe is headed for what might be a deep recession despite
the pledge of European Central Bank president Mario Draghi to “do
whatever it takes” to save the euro, don’t break out the champagne. But
neither should you panic.
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