Wednesday, July 23, 2008

Cox and Alm ask "How are we Doing?"

Economic pessimists would like Americans to believe that our current economic struggles echo the harsh conditions of the Great Depression. John Stossel reports in a recent column that the media is reacting more negatively to economic news than their counterparts in the early 1930s.

As we have previously noted, not everyone agrees with such dismal forecasts of the economy. In this month's The American, W. Michael Cox, a Senior Vice-President and Chief Economist at the Dallas Federal Reserve, and Richard Alm, the bank's senior economics writer, argue that our economy is doing quite well in historical terms. Compared to our grandparents' generation, real incomes have risen, productivity has increased, and gasoline is cheaper per hour of work. Moreover, we enjoy a greater standard of living, safer workplaces, more leisure and access to luxury products unimaginable to previous generations.

Cox and Alm argue that our current economic struggles are a mere blip in economic progress:

Taken together, it’s enough to shake our faith in American progress. The best path to reviving that faith lies in gaining some perspective— getting out of the short-term rut, casting off the blinders that focus us on what will turn out to be mere footnotes in a longer-term march of progress. Once we do that, we see the U.S. economy, a $14 trillion behemoth, is doing quite well, thank you very much.

So, as the authors ask, "How are we Doing?"

HT: Jeff Jacoby

Addendum: Robert Samuelson agrees that we are not heading towards a depression.

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