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It’s the Two Economies, Silly |
The business sections of the major media are looking a bit grim these days—with the exception of the stock market, which has soared to record highs.
Beyond the Dow Jones listings, the subprime mortgage disaster—and the related massive number of foreclosures—is making a lot of headlines. As is the news about endlessly soaring cost of gas and tanking home prices.
It’s hard to put a rosy glow on much of the economic news, but if any media outlet is up to the task, it’s The Wall Street Journal.
In advance of the latest bad news—today’s Commerce Department report that the U.S. economy grew last quarter at a 0.6 percent annual rate, the weakest in more than four years—WSJ columnist Justin Lahart framed it thus (subscription required):
Good news! The economy was even weaker last quarter than originally thought.
The convoluted point he tried to make essentially boils down to this: U.S. economic growth is so slow now, it can only go up from here.
The revised gross domestic product (GDP) figures compare unfavorably with the 3 percent pace initially estimated last month. Yet, some economists are predicting the nation has hit bottom and growth will improve, along with the housing market. Those same economists also predicted the housing crisis would not be nearly as bad as it has turned out to be.
Meanwhile, the Bush administration is spending $428 billion on the Iraq war. That’s $2 billion a week. (Remember the $100 billion to $200 billion estimate for the war given by the Bush administration? Neither does Bush.)
As Bonddad, who knows a lot about the economic scene, writes:
I would love to give you a great moral argument about why this war is a bad thing. There are others who can do that. I’m a money guy. And this thing is way too expensive to continue.
Sean-Paul Kelley on The Agonist points out the dismal state of April department store and discount store sales, which sharply contrast with sales at luxury retailers in the same month. Sales at Saks Inc., for example, soared by 11.7 percent.
Kelley concludes:
What more proof do you need that there are two economies?
Maybe a Dow Jones Industrial Average that’s more than 13,600, a seemingly abstract indicator that only benefits approximately 10 percent of the U.S. public?
Something to keep in mind as the dueling stats pour in.
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