According to a recent survey, 90% of economists are optimistic about the US economy, which prompted Cavuto to ask on air last night: everyone’s been wrong before so maybe we should still worry now?
This thrilled me as it meant I could trot out my favourite quote: “the function of economic forecasting is to make astrology look respectable”. So said renowned economist Galbraith. Words that never rang truer than in the Noughties.
Here’s the thing. The economy is growing – the economists are right about that. The problem is, people are not feeling it.
Even with the projected growth this year, the US is still looking at an unemployment rate of 9% come December. The 200,000 jobs that should be added a month in 2011 are a far cry from an emerging market such as Brazil, which is adding on a million jobs a month.
The business community is currently sitting on $2 trillion in cash and liquid assets, more money that they’ve had at any time since World War 2. But companies are tending toward spending this money on stock buy backs and acquisitions rather than hiring (in the US – they may be venturing abroad).
Home values are still depressed. State budgets remain in deep trouble.
The academics may well be right. But that doesn’t mean that Main Street still hasn’t every right to have cause for concern.