Gloomy, Gloomie…

Gloomy, Gloomier, or Gloomiest

This week I offer a rather narrow range of choice of scenarios: gloomy, gloomier, and gloomiest, leavened only with a brighter after thought. The merely gloomy forecasts anticipate unsatisfactory growth but no recession. Analysts of this view advance three arguments.

First, we are living through still another summer of our discontent, those months in which the growth engine of the U.S. economy inexplicably takes a vacation before returning to work. Second, there are signs of strength in the economy. The housing sector seems to be recovering, although with stumbles along the way. Good earnings reports from such as Boeing and Caterpillar prove that there are some signs of bright amid corporate gloom. Led by such stellar performers, it is not beyond imagining that the economy will bumble along, growing at 2 percent later this year and into 2013. 
Third, the monetary policy gurus at the Federal Reserve Board are sufficiently disturbed by weakness in the jobs market to give the economy another boost. Fed chairman Ben Bernanke will reach into his bag of tricks and announce new stimulative measures – “additional steps” is his preferred language – if not at the meeting of the Fed’s monetary policy committee next week, then at the August conclave of central bankers in Jackson Hole.
Since none of this makes much dent in unemployment, and since Europe is headed for what might be a deep recession despite the pledge of European Central Bank president Mario Draghi to “do whatever it takes” to save the euro, don’t break out the champagne. But neither should you panic.
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