It is getting harder and harder for those who think the economy is not actually getting better to find evidence to support that opinion. While there are still issues in the economy related to home mortgages, commercial real estate, and unemployment, business has now factored in those things and adjusted their overall business models to handle a lower level of overall activity.
The companies that did this the best are making profits that exceed the estimates and indicate that they can be successful in the current and future economy. Consumer spending will probably not return to levels that existed during the bubble, but it doesn't need to. In fact, the fact that we have excess capacity and room to grow withing prior limits will limit inflation and put the overall economy on a better footing.
If consumer spending drops 15% and represented 70% of the economy, it would reduce GDP by 10.5%. Now we have seen this reduction and if consumer spending goes from 70% to about 66% of the economy, that difference can easily be made up over time by development of alternative energy and exports.
If you really look at the numbers, we are moving into a healthier economy than we just left and with the change will be able to reduce our balance of payment issues and start to absorb more of our own debt.
There are very healthy long term trends emerging and while we can expect some bumps in the road, the country is far from Armageddon.
No comments:
Post a Comment