End of the world? I don’t think so
January 31, 2012
While the Mayans predicted the world would end in 2012, I am predicting the opposite. I think the world will come back to life in many ways. I see a rally on the horizon.
If I’m wrong, then it won’t matter much because the world will have ceased to exist. What good will a prediction be then?
But I don’t think I’m wrong. I think the worst wounds of the recession are healing, still tender, but less debilitating. People feel that they’ve been beaten up enough. They’re standing back up and breathing the storm-washed air. They’re picking up the pieces and throwing them into new engines of industry, new fires burning across the continent.
It’s widely accepted that the national economy will sputter beneath 2 percent GDP growth the next two years. And who’s willing to argue with economists? They get paid to explain how everyone else gets paid. Of course they’d like a growth rate of 4 percent, or 6 percent, but they just can’t misrepresent the data to the American people. They’re scientists of the dollar. Stewards of the trending. And so the self-fulfilling prophecy continues. Economic forecasts are revised downward, companies hold their capital, curtail positions, and economic growth stagnates.
I would love to be called an economist, and to be paid like an economist, but I’m neither smart enough nor dense enough to prophesy over a trashcan of incomprehensible numbers. The problem with economics, not to mention other social sciences, is that it uses highly esoteric scientific models to predict highly erratic social behaviors. Unlike the natural sciences, where observation, analysis and hypothesis can reveal fundamental laws of the physical universe, economics fluctuates with the brazen anomalies of humankind.
Brazen is not a bad word to describe what the economy needs. In a game like economics, where the influence of interested parties runs high, data is culled, refined and used to varying ends. Drooping around like a homesick dog, however, this economy needs no culler of data, no tinkerer of numbers. This economy needs a warrior of the bedrock: someone with a sword to cut through the statistical malaise and energize labor and capital. Think steel. Nuts and bolts. Think gas. Drills and pipes. Think semiconductors, lithium batteries and iPhones. People are hungry for new goods. People are hungry for new ideas. The forced asceticism of the recession has pent up demand for education, occupation and consumption. People want to learn, work, and enjoy the fruits of their labor. They want to feel emotion in what they do and how they live.
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In December, the Conference Board Consumer Confidence Index jumped to 64.5, up from 55.2 in November, a big deal if you listened to business reporters. What was harder to distill was why it’s a big deal. Delving into the calculations of any index can be a head-numbing experience. What reporters should have said is, “Hey, a bunch of random people surveyed, somewhat representative of all of us, feel better about the economy than they did before. They feel better about their own circumstances and spending money in the future.”
The markets have been responding likewise. Investors saw modest gains last year. Many companies widened their profit margins, paid down their debt and invested in long-term capital improvements. Try to remember back three years ago when GM was foundering in the grip of the recession. How many people predicted it would be the top car seller in the world by 2012? Certainly not the Mayans.
Locally, there has been movement on the housing front. Home sales are up, nearing pre-recession levels. Prices are down, way down, but demand is up, way up. Seeing as I’ve already poked fun at economics, disqualifying myself from any logical propositions, I’ll let readers make the connection between price and demand.
Unemployment is also looking better. The unemployment rate dipped to 13.3 percent in November, the lowest of the year, before inching back up to 13.8 percent in December.
I cringed when I heard it had gone back up. But considering that total employment stayed exactly the same, I quickly convinced myself that December was a blip in the greater trend, an aberration that will fade into spring.
Of course I lack the proper metrics to promise the unemployment rate will, finally, after three years of anguish, abate like the waters of a biblical flood. Throw in unknowables like Europe and Iran, and the Mayan prophecy suddenly looks more plausible.
It could be a self-fulfilling prophecy. If we assume that society will fail in the face of horrendous, earth-shifting challenges, then society may indeed fail.
If, on the other hand, we assume that human beings can solve the problems of their own making, then the picture changes.
One thing economists have a hard time factoring into their forecasts is the election cycle. This is an election year, and that’s one of the reasons I see a rally on the horizon.
Despite partisan politics, elections themselves galvanize the citizenry. They force people to examine their lives, make decisions and invest in the future.
Democracy is the best form of stimulus.
Will the world end in 2012? I’m placing my bets on humanity.
n Scott Neuffer is the business reporter of The Record-Courier. Reach him at firstname.lastname@example.org or 782-5121, ext. 217.