An Economic Turnaround?

The lead article in today’s New York Times is titled, “Central Bankers Suggest Rebound May Have Begun.” It describes the opinion of several experts, including the chairman of the Federal Reserve, Ben Bernanke, that the economy is on the rebound. His statement was based on several factors including turnarounds in other countries in Europe and Asia as well as yesterday’s announcement by the National Association of Realtors that the sales of existing homes increased by 7.2 percent in July, much higher than anticipated.

The article goes on to express others’ thoughts that the stock market has turned around and cited its growth by 45 percent since March. In addition, yesterday’s gains included a wide variety of stocks in addition to housing such as oil, gas, gold, manufacturers and energy producers. Other countries such as France, Japan and Germany also reported growth.

While this all seems like good news, I still sense storm clouds on the horizon. Unemployment is still growing, and consumer spending, “the engine that drives the economy,” is still depressed. If people are unemployed and don’t have any money to spend, all these financial statistcs could collapse like yet another balloon. The best type of growth is from the bottom up, and this seems primarily like the top down.

We shall see …