Lambro: Recession fixation

Donald Lambro commented today in the Washington Times that Americans are deeply pessimistic about the future of the American economy, owing in large part to the Democrats media campaign that the economy is in recession. Let us look at the facts.

• GDP grew 0.9% in the first quarter of 2008. This is weak, but it is not recession.
• The unemployment rate is low and near 5%. People who want to work and who have some marginal skills are working.
• New home sales rose 3.3% in April. As earlier noted in this blog, home sales are really only in trouble in a few areas of the country, generally those where unrealistic increases in housing valuations occurred earlier.
• With the exclusion of transportation orders, factory orders increased 2.5%, the largest such increase in 9 months.
• We remain the world's largest economy, producing $14 trillion of goods and services each year.
• Exports grew 3% in the first quarter and we are selling $1.4 trillion of goods and services abroad.

This appears to be a relatively mild slowdown and we appear to be starting to come out of it. Noting that the stock market is forward-looking, I recently rearranged my retirement portfolio to weigh stocks more heavily in order to take advantage of the coming increase in growth rates in the economy. The American economy is very robustly minimizing the effects of the loss of housing values in some areas of the country, the problems with some types of credit, and the very high cost of oil. The only really worrisome future event is an economy-killing combination of Democrat tax increases and legislation to squash our use of energy in business favored by both Obama and McCain. Short of these disasters, I think the economy will soon be doing much better.