Don’t call us stupid. We know it’s the economy. It is of central importance to our political, philanthropic, aesthetic, and working decisions. So for the end of this week MKCREATIVE tapped into the bright minds at The Atlantic Magazine as some of its economists commented on the recent numbers released for Q1 2010. The numbers beg for the rhetorical question of whether the glass is half full or half empty, for some of the numbers are wonderful, though, as Derek Thompson also points out, we are still dragging a ‘heavy anchor,’ namely, the housing sector.
In this corner, weighing in with the optimism of a second quarter in a row of positive consumer spending, is Daniel Indiviglio. Consumer spending is up, and government intervention/stimulus is down (and still there is growth). The growth is not as pronounced as Q4 of 2009, but that quarter is always driven by the holiday gift-giving anyway. In any case, the signs are positive in enough aspects of the economy to make him see positive numbers going forward:
The U.S. economy continued to strengthen in the first quarter of 2010, growing at an annualized pace of 3.2%, according to the Bureau of Economic Analysis. This matched economists’ expectations for real gross domestic product (GDP) growth. The data continues to indicate that the U.S. is in recovery. In particular, the changes in the various contributions to growth make clear that the U.S. economy appears to be on the right track.
And in this corner, bringing to the bout some positive vibes but seeing a real downer in the housing market, is Derek Thompson. He agrees with his counterpart’s optimism, but not nearly with the same intensity. True, consumer spending is up, but Thompson believes (rightly so) that we still need greater productivity and consumption to get companies to (re)hire. Only when that happens will we see sustainable growth:
So yes, things are getting better. Inventories were replenished in late 2009, and consumers started spending them down in early 2010. We should expect disposable incomes to start rising in the next few quarters as steady consumer demand encourages businesses to hire again and to full-time their part-timers. Then again, the housing market — which helped drive the last boom — is still in the worst shape in the last 50 years. That’s a heavy anchor.
The housing market continues to be a burden for, as we have posted in the recent past, foreclosures have not slowed, and many fear a second (or is it the third, now?) wave of defaults and foreclosures on business properties. The punch under the belt might be recent developments in Greece that involve Goldman Sachs. If Goldman Sachs continues to be beaten up by Congressional committees and SEC investigators – and it loses money on its manipulations of the Greek debt – we might get a one-two punch of a recession as GS tries to recoup losses here in the US with a restriction on credit.
But economic well being seems based as much on one’s sense of the future as on one’s balance sheet. The US economy is stunningly flexible, dynamic, and capable of rewarding calculated risk while absorbing well-intended failures. Holding steady, with some positive-growth numbers tossed in each quarter, is not ideal, but it beats some of the alternatives out there.