We are all tired and perhaps, resigned to the new normalcy. The job loss numbers are good because they are not as big. Is is sign of capitulation? Are we becoming thick skinned economist?
Somebody told me that about 90% of the people are still employed. 9.5% unemployment is fine. Is it? The impact of one job loss has ripple effect through the social network. The colleagues, friends, and family suddenly become extra careful with their savings. The result is economic malaise. So why are stocks up? Is stock market really a precursor? It did not predict the downturn!
I believe that the economy is definitely recovering. Its natural. At some point, we will need to replace our PCs and laptop. It has a life of 3 to 4 years. We will start replacing cars; it becomes more costly to maintain an old one than the monthly payments for a new one. We will need new cell phones. We will need new clothes. Its the replacement cycle. The question is - what is the speed and shape of the recovery. Will it stop at replacement cycle? The answer lies in the shape of the new economy. Are we going to be frugal consumers forever? Probably, we will be for a short period. We will save more for rainy days. Perhaps, one day we will forget about it. The economy will heat up again & we will learn more about ourselves.
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