Hmm, this is one of those posts that I might see totally different in 6 months, but feel the need to get this one off my chest.  I keep hearing the media talk about how bad the economy is right now, or is expected to get in 2008.  Yet, I wonder how many of these talking heads on TV or people in general remember what a really bad economy looks like?

I am old enough to remember Jimmy Carter and his “Misery Index”.  I also remember my parent’s generation of the late 1970’s paying around 15% interest rate on a mortgage. During this same time period, a gallon of gas adjusted for inflation was still higher than it is today.  I also remember the feeling that America just could not do anything right and the Soviets were going to take us over.  The late 1970s and 1980-1982 resulted in some real economic down times.  The unemployment rate in 1982 peaked at 9.7% as a result of the Carter years. See http://www.bls.gov/cps/prev_yrs.htm

The “stock market crash” of 1987 hurt a lot of people, but it was the market correction that led to a major market boom. The 1990-1991 recession under George H. Bush was pretty mild as far as recessions go, but it was a recession.  The market does correct itself.  I bought my first house in 1990 with an interest rate of 10%.  I sure don’t miss the 10% rate, it was painful.

Yet, in 2006, the unemployment rate was 4.6% and around 5% in 2007.  When I went to college, this was considered full employment.  In other words, anyone that wanted a job had a job.  Home ownership is still at a high, and interest rates on mortgages are still incredibly low.  Sure gas is high, but as I said earlier it’s still not higher than in the early 1980’s adjusted for inflation. It may be true that the economy is in for a downturn.  We may even see a recession.  Yet, a recession is a necessary part of capitalism.  I guess the bottom could drop out one day and Chicken Little will have been right all along.  However, for goodness sake, let’s all keep in perspective that the economy is still in great shape overall.  Todays younger generations just have not seen a bad economy.  It will come, but is it now?  I don’t know, but I do know this.  The economy, according to my public education from high school, is basically sound.  We have a financial lending crisis going on, but not an overall economic downturn.  The GDP was 5% growth in the 3rd quarter and .5% in the 4th quarter of 2007.  Those numbers are not a recession.

Only time will tell, but I can tell you I will take 2007/early 2008 any day over the Jimmy Carter years and early 1980s.  We can thank Ronald Reagan, and a brave congress, for cutting taxes which saved us all at that time.