The Everything Bubble: Seems We’re All Doomed and No One Knows Why
You don’t have to look too far to find news about how everything is going to hell in hand basket. Right here in the United States, things are so bad that Congress has become public enemy number one, corporate rights are treading on human rights, and the economy, as far as anyone can tell, is still FUBAR. Most people can look out their window and build an argument for bad fiscal policy based on the number of potholes on Main Street.
All this bad mojo has got people stuck in a rut. Gallup’s index of economic confidence has screamed net pessimism nonstop since 2008 when recording began. At the end of July, just 19 percent of survey respondents described economic conditions as excellent or good while 35 percent described economic conditions as poor. When asked about the economic outlook, 35 percent said it was getting better while 60 percent said it was getting worse. The kicker is that in the last full week of the month, the number of pessimistic positions increased while the number of optimistic positions decreased.
If sentiment isn’t your preferred indicator of economic well being, that’s fair, but economic confidence is informed (at least in part) by the data being piped in from the front lines. According to the U.S. Bureau of Economic Analysis, gross domestic product contracted at an annual rate of 2.9 percent in the first-quarter of 2014, while gross national product decreased 3.6 percent. It was the worst contraction since the Great Recession. The severity of the downturn was a sucker punch, reducing second-quarter growth estimates by as much as half a percentage point, according to CNBC, as analysts and economists revisited their expectations for consumer spending and business investment. However, GDP did grow by 4 percent in the second quarter, thanks largely to a large increase in inventory build, bringing total growth for the first half to about 1 percent.
But chronic low growth and a generally challenging economic environment are familiar problems, and at this point the U.S. is presumably too old and successful to let anything short of crisis truly derail it. So the real problem is not necessarily that the nation has some issues it needs to sort out — in a relatively stable environment, we could farm solutions — but that just five years after the worst financial crisis since the Great Depression, there’s a bunch of evidence suggesting that we could be heading toward another.