President-elect Obama said it himself on Monday: The economy's about to collapse, and if Congress doesn't act fast, it will. Everywhere one turns, lousy economic news abounds. Is it possible we've been through the worst and this year will be better than last? Not according to most of what we hear in the media. But the possibility exists despite the naysayers.
Yes, car sales are down. Yes, Wall Street's in the pits. Job losses are dismal and mounting. The housing market? Let's not even go there. But I believe two factors--low interest rates and low energy costs--could help ignite at least moderate growth before 2009 winds up.
Jerome Idaszak, associate editor of the Kiplinger Letter, cites these additional reasons for measured optimism:
Inflation will also be low, in the 1%-2% range for 2009, stretching paychecks for those who still have jobs.
And federal spending will be a big help to the economy. President-elect Obama and Congress plan a stimulus of over $800 billion in tax cuts and spending as early as this month. If the money can be put to work quickly--a big if--it will create a few million jobs.
There's also a new sense of public confidence in Washington. About 70% of Americans say they are optimistic that the Obama administration will be able to spur growth. Economists say confidence is a key element, especially as it relates to consumers. That's a big plus if Obama can deliver quickly enough to keep the momentum.
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By Bonnie Erbe