by William Neikirk
Amid the general gloom of today's economic news, it is refreshing to see contrarians raise their voices. They are hard to find these days, but they are out there, lurking, spreading a little joy.
Take Brian Wesbury and Robert Stein, economists at First Trust Advisors in Lisle, Ill. The recession that many economic analysts say has already started will never come to pass, they said in a report Monday.
Their take: Interest rates and tax rates are low. Productivity is growing strongly. "When these three things have been true, the U.S. has never fallen into recession. When these things are true, a financial market collapse is highly unlikely."
As for payroll job losses reported by the Labor Department for April, Wesbury and Stein noted that a separate jobs survey showed the unemployment rate declining. This separate survey, designed to measure the employment situation more broadly, has been stronger in recent months, they note. (Many economists, however, believe the payroll report is a more accurate measure of joblessness).
"The conventional wisdom is not always wrong," they said. "But because it depends so much on emotion, it can often mislead. Rather than dwelling on the bad news coming from the financial and housing sectors, we believe it is important to look at the underlying drivers of the economy. And those look very solid."
Also on Monday, an economist named Joel Naroff of Holland, Pa., took note of the April report of a non-manufacturing index cobbled together by supply managers. It showed that the non-manufacturing sector rose in April after having declined for three straight months.
"The U.S. economy is not the Temple of Doom as some economists have argued," Naroff reported. "Orders continued to expand even if only slowly." There were signs that firms added workers after having cut them in March, he said.
Overall business activity is still sluggish, conceded Naroff, but added: "The economy has not collapsed. OK, it is not great, but a major recession does not appear to be in the cards. Indeed, it is not clear that we will have more than one negative quarter (negative in economic growth)."
Now many others disagree as the credit crunch continues and the housing sector is in the tank. Higher gasoline prices are draining consumer income, and food and other commodity prices are up, too.
Many analysts argue that the borrow-and-spend cycle that has powered economic growth for years has come to end, and a long period of entrenchment is ahead. Some fear a long and possibly deep recession.
Michael Drury, economist at McVean Trading and Investments LLC, a Memphis firm specializing in futures trades, said he did foresee a deep recession, but possibly a long one.
He said the tax rebates being mailed to Americans are nothing more than a Band-aid. And he worried that the Federal Reserve and officials in Washington will focus their efforts on fighting emerging inflation rather than the economy's softness.
Optimism and pessimism are at loggerheads these days, showing that statistics and economic concepts often can be read two ways. But in times like these, one sentiment is sure to prevail: Good old-fashioned caution.
Beware of the dark side, but may the force be with you.





Comments
Since when is an economist ever held to even the level of accuracy of a meteorologist on the evening news?
The non stop trashing of Hillary for CHANGING THE NEWS AGENDA FROM WRIGHT TO BIG OIL PIGGIES amazes--particulary since the attacks started from Obama and his particularly vicious blog rooms.
(I don't know what the reputable rooms like the swamp or lynn sweet censor from the white supremacists, but certainly this blog group is beyond the pale!)
I NEVER bought the gloom and doom stuff--sure seemed like folks were plotting to get some more homes on the market at the prices THEY wanted.
Regardless--we had our economy ruined with 'rolling recessions' since about 1974 with the Vietnam War debt--didn't we?
Time to stop funding the Iraq War.
I'm going with Clinton--but will vote for Obama if he's the front-runner. The Obamas are just too nasty to her.
Posted by: I'lll take astrologers over 'economists' any day | May 6, 2008 7:02 AM
I'm surprised that William "I love recessions" Neikirk would even quote economists who believe we won't enter a recession.
Posted by: John D | May 6, 2008 10:01 AM
It doesn’t take a “rogue” economist to see the obvious. Theatres, stores, stadiums, restaurants, etc. are all jammed. 95% of real estate owners are in fine shape, and the trouble spots are great opportunities for new buyers. We’re at full employment, and the boomers are starting to retire. If anything, a skilled labor shortage will be the bigger problem. Volunteer work and charity contributions are at all time highs.
Are things perfect? Absolutely not. Do we have greater wealth, more opportunity, lower unemployment, and even lower gas prices than most of the world? Absolutely.
The real problem is a doomsday media, and a lot of spoiled Americans. C’mon people, don’t let the Jones’s get ya down, and don’t let politics keep you from appreciating what you have.
Posted by: C'mon People | May 6, 2008 10:38 AM
Have you been to the unemployment office, lately!!? How about a factory, of the few that are left, have you talked to any factory or skilled workers, lately. if you have, I don't think you would propping up that pie in the sky nonsense. We all know what we can do with numbers, look at what President Bush and his cohorts were able to do with numbers, and now their are 4000+ dead and 50000+ crippled or maimed!! Unless you are in the factory, on the docks, or on an assembly line, try not to speak for those that are!! We don't need any more Republican hogwash, what we did get from you guys, sure has put this country in the toilet, unless you are the Oil Corporations, The Pharmaceutical Corporations, the Insurance Corporations or the Automotive Corporations. With each passing day, more products reach our shores from cheap labor markets, I hope we will re-think this huge problem, especially when you have men and women making millions and millions of dollars a year, and in rare cases, but happening, none the less, billions a year!! No more hogwash about how good the workers have it, please!!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE. NOW.
Posted by: Don Fitzgerald, Chicago | May 6, 2008 11:46 AM
I'll bet Brian Wesbury and Robert Stein think global warming is a hoax and that intelligent design should be taught in school. They're probably also breathlessly awaiting the Rapture. And they probably breathe through their mouths and drag their knuckles, too. I mean, how else could you disagree with the Left? This nation is horrible! No one has a job. And if they do, they're not earning enough to pay for basics. And for the few that do earn enough, they can only buy a 32-inch TV with the basic programming package. This country is falling apart! Just ask Don Fitzgerald. He tells you every day.
Posted by: JB | May 6, 2008 12:29 PM
I can't name a single fully employed friend or family member (most of whome are actually highly skilled and educated) who's seen their payrate come close to keeping up with rises in the cost of living. I can name several who have lost work, lost benefits, and all of them have seen their share of the so-called employer payed healthcare increase.
Those that have lost their jobs are facing fewer job opportunities than years past would have yielded. Almost as bad, those highly skilled and educated who haven't seen a decent pay increase in years can't find a job-hopping opportunity that pays even at their current pay level.
Add to that the tightening of consumer credit guidelines that all banks are implementing, and the skyrocketing cost of continuing and expanding our education, and we in the middle class are finding ourselves slowly but steadily sliding down the ladder of "upward" mobility.
These economists may be technically correct about the health of our economy, but those are just statistical results. It doesn't change the facts on the ground for most Americans.
With this election, our eye is on changing the "things are peachy for shareholders" mentality. We're tired of seeing our economy discussed purely in terms of HOW MUCH success stockholders and executives are reaping. Unemployment, pay disparity, wage stagnation, cost of living, and other harsh realities of everyday life need to become more of a concern to our economists and leaders than just statistical variables used to determine Wealth.
Posted by: fontapa | May 6, 2008 12:35 PM
JB, global warming is a hoax. Facts: ocean temps have been stable for several years now. Fact: Much of North America experienced one of the coldest and snowiest winters on record this year.
Fact: China experienced its worst winter.
Fact: Australia experienced some of its coldest weather last year.
Fact: Cape Town and Buenos Aries both saw snow last year, the first time in decades.
Fact: Earth experienced the Little Ice Age from mid 1300s to mid 1800s. Temps have risen since MINI ICE AGE ended!!
Posted by: John D | May 6, 2008 12:48 PM
Have you been to the unemployment office, lately!!?
Posted by: Don Fitzgerald, Chicago | May 6, 2008 11:46 AM
Don Fitzgerald- No I haven't , and neither has the rest of the 95% of the workforce that have a job..
When you say " We don't need any more Republican hogwash..." You are mistaking ideology with economics ( again )..
Cheap products are reaching our shores because domestic manufacturers of these products have been regulated and taxed - by both sides of the aisle- out of this country.
Both Dem candidates are chomping at the bit to repeal the Bush tax cuts , and to increase the corporate tax rates ( which BTW are WAY higher than our international competition). What do you think will happen to jobs, trade deficits etc, when ( your words) this hogwash happens?
You were in favor ( in a previous post) of taxing oil's "evil" profits, but you are also wanting cheap products manufactured in the US... you are contradicting yourself..
Posted by: heartburn | May 6, 2008 1:16 PM
Fontapa – “we in the middle class” are among the most affluent people to ever inhabit the planet. Not keeping up with the “cost of living” usually means one needs to cut spending. Not my cable TV and cell phone, oh the horror! “Facing fewer job opportunities” usually means one may need to switch careers. Healthcare, IT, engineering, teaching, etc. all looking for good people. 100 years ago most of us were farmers. Roll with it. Not reaching your “current pay level” often means one has reached a higher plateau where jobs get more limited. Always live below your means, because you may need to accept a lower paying job at some point. “With this election” means you are expecting government to “change” everything. Even in the 90’s, which many consider to be our most prosperous time ever, the unemployment rate and poverty rate were relatively the same as now.
Don F – I won’t even go there. Maybe if you spent more time helping your neighbors instead of posting the same depressing stuff everyday, you might get somewhere.
Posted by: C'mon People | May 6, 2008 1:50 PM
"they probably breathe through their mouths and drag their knuckles, too."
Well, I'm glad you're not going to be arrogant and full of yourself about it. That strategy has worked SO well for Al Gore, after all. Manbearpig is a huge threat. Sure.
Posted by: Jeff | May 6, 2008 2:15 PM
I just love all of this Republican Hogwash. Keep it up, ladies and gentlemen, you ignorance and callousness are showing!! What do you care, though, as long as you get yours!!?
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE. NOW.
Posted by: Don Fitzgerald, Chicago | May 6, 2008 3:29 PM
sure has put this country in the toilet, unless you are the Oil Corporations, The Pharmaceutical Corporations, the Insurance Corporations or the Automotive Corporations
Posted by: Don Fitzgerald, Chicago | May 6, 2008 11:46 AM
Way to go Don. And don't forget the Orange Juice crop growers, dairy farmers and corn farmers. They're all in this together ya know. Supply and demand have nothing to do with economics.
On a serious note, why is it orange juice prices go up because of a bad harvest, and no-one screams price gouging. Yet, the world consumers more oil than just a few years ago (more demand, less supply) traders push up oil and gas prices (which are traded just like any other "commodity" like orange juice) and its price gouging?!?
Want oil prices down, car-pool, walk to work, or buy a smaller car (Prius).
Posted by: Trey | May 6, 2008 3:45 PM
I just love all of this Republican Hogwash. Keep it up, ladies and gentlemen, you ignorance and callousness are showing!! What do you care, though, as long as you get yours!!?
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE. NOW.
Posted by: Don Fitzgerald, Chicago | May 6, 2008 3:29 PM
Don- don't take your ball and go home ...
Calling something Hogwash- while interesting, and maybe a term that works for you, doesn't count as a response.
Can you tell me what your definition of hogwash is, and how it;
1. is unique to Republicans.
and
2. Applies to my criticism of your rant disguised as an argument.
BTW - (your phrase) "...you ignorance and callousness are showing!! " Is horrible english-YOUR ignorance is showing.
So there.
Posted by: heartburn | May 6, 2008 4:00 PM
Here is your answer, " hearburn ":
1.) The Iraqi war, that fiasco is unique to the Republicans, brought to you by their hogwash!!
2.) I wasn't aware of your criticism, so I went back and read your contribution. While it appears to make sense, it is actually more hogwash, corporate hogwash. It was during the first Bush administration that you actually had one of our government agencies paying corporations to move their jobs to countries that offered cheap labor. To compound that, they never passed on the savings to the consumers of this country, adding insult to injury. That is not economics, that is ideology. That is capitalism over democracy. That is why you have 71% of the Americans polled, find President Bush in disfavor> It has to do with the hogwash the Republicans have fed this country for the last 8 years!!!
SUPPORT OUR TROOPS, BRING THEM HOME, ALIVE. NOW.
Posted by: Don Fitzgerald, Chicago | May 6, 2008 5:21 PM
Fitz,
If I went to an unemployment line, I would probably see you. With your lack of brains, its the only place you should be - unless John E can get you a job.
As far as the Iraq war - were you complaining when Bill Clinton bombed Iraq in Dec, 1998 over the WMDs? What happened to those WMDs between Dec, 1998 and Mar, 2003?
EDUCATE THE IRISH MORON - NOW.
Posted by: Terry | May 6, 2008 7:40 PM
1.) The Iraqi war, that fiasco is unique to the Republicans, brought to you by their hogwash!!
Posted by: Don Fitzgerald, Chicago | May 6, 2008 5:21 PM
Hmmm, what party took us to Vietnam and was in charge until January of 1969? Hogwash!!!
Posted by: Trey | May 6, 2008 9:29 PM