The Optimistic Economy
This week I noticed two articles showing that after nearly 5 years various economies around the world are now showing some promising signs.
I’m curious about the surge in domestic oil in the U.S. We have such short memories about energy policy that seems very short sighted.
The online education factor seems to be a global trend and one that needs more investigation.
“less expensive online education programs could open the door to millions of people who have been priced out of more traditional academics”
I also like the recognition that GDP does not capture the real impact of changes – especially in the digital economy.
“A few other private economists are even more bullish. Jim Glassman, senior economist at JP Morgan Chase’s commercial bank, estimates the economy could expand by 4 percent in both 2014 and 2015. If that were to come to pass, it would be the strongest back-to-back annual growth since the late 1990s.
“I think 2014 will be the real deal,” Mr. Glassman said. “If we get to that level, which I feel pretty confident about, economists will say it’s about time.”
Mr. Cowen, who is also an occasional contributor to the Sunday Business section of The New York Times, is more skeptical about a short-term takeoff, focusing instead on what he sees as a brightening, longer-term picture of the United States economy.
The recent surge in domestic oil and gas production signals “the start of a new era of cheap energy,” he said, while less expensive online education programs could open the door to millions of people who have been priced out of more traditional academics.
At the same time, Mr. Cowen said, he now expects subtler improvements in the country’s economic well-being that will not necessarily be reflected in statistics like gross domestic product, but will be significant nonetheless.
For example, slower growth in the cost of health care will be a boon for the government and businesses, but will actually subtract from reported economic activity. “It’s like the music industry,” he said. “Revenues are lower at record companies but the experience for listeners is better.”
Martin Neil Baily, a senior fellow at the Brookings Institution and a former chairman of the Council of Economic Advisers under President Clinton, said he has always been skeptical of Professor Gordon’s long-term view but has recently become more hopeful about the short-term as well.
“I don’t buy the historical wave theory,” he said. “He’s right that there are headwinds like slowing population growth but the tech revolution is still very much happening.”
In New Zealand we saw this headline Consumer confidence jumps to highest in 3 years
“The survey showed a net 10.1 per cent expect their own finances to improve, up from 7.2 in the previous survey. A net 35.4 expect their longer-term economic outlook to improve, up from 32.1, and a net 34.4 per cent thought now is a good time to buy a major household item, up from 30.8.
Meanwhile, households’ assessment of their current financial situation slipped to negative 10.8 from negative 10.4, although it remains the second highest level since December 2007.”
We all like a good news story but relying on consumer spending as a way forward seems like a very fickle indicator. It is likely that the Christchurch rebuild and other factors are making New Zealanders feel more secure in their spending habits.
Tt looks to me like the survey is not noticing the negative indicators because we want to believe the good news.
I for one hope that we are see the signs of real recovery but consumer spending alone does not offer any long term solutions or add any real high value jobs to the economy.
In other news here is an organisation called Lifewise that promotes an event called the Big Sleep Out.
The kind of real economic indicators are ones that show improvements to the quality of life for everyone.
I take my hat off to all of those people who are taking part in this years event. So far 82 and each one is looking to raise at least $1k to change the lives of homeless people in Auckland.
The event takes place on Thursday, July 4th to Friday, July 5th, 2013 (6.30pm to 8am) Check out who is taking part and support them with donations if you can.
Seems like poetic justice that 4th of July is also a significant date in the U.S calendar of events.
The Lifewise Big Sleepout is an annual event aimed at raising serious funds and channeling significant attention in the direction of solving homelessness in the city of Auckland. It is a night where influential New Zealanders forgo their creature comforts for a night of ‘rough sleeping’ as a way of making a public stand against homelessness. Put simply, it’s a no-holds-barred approach to exposing what is often an invisible issue.
The ultimate aim of the Lifewise Big Sleepout is bring an end to homelessness – for good.