Friday proved to be another banner day for psyche abuse with reports that the University of Michigan’s consumer-sentiment index had “plunged” to its lowest level since 1982.
Recession here. Recession there. Recession everywhere.
Gas prices rise. More homes go into foreclosure. Companies file bankruptcy. Earnings disappoint. American Airlines cancels flights. (Yes, apparently that could have a negative impact on the economy).
The economy is sinking into a deep, dark abyss and we are all going to get sucked in along with it.
Of course, that depends on if you believe all the headlines and all the talking heads making a mint off pontificating about the dismal state of the economy or predicting it’s demise.
Doom and gloom is the talk of the town and many are as anxious as folks in other parts of the country who have more reason to worry. The national woes, mostly affected by the mortgage and housing troubles, weigh on minds here and cause pause everywhere.
It doesn’t help that information flows much more quickly than it did in 1982 or in the early 1990s. A person in a small town can get news as instantaneously as someone in New York City or Washington, D.C.
And, you can see and hear it over and over — and over and over again. Everyone knows what happens with repetition. It becomes belief.
Economists differ on whether the nation is in a recession and watching the experts can be confusing.
Some say no with models based on leading indicators and lagging indicators or maybe lagging leading indicators or leading lagging indicators. Others say ‘yes,’ based on four data points used by the National Bureau of Economic Research — employment, personal income, retail sales and industrial production.
Those have been off since January and momentum isn’t good. The bureau is expected to make it official soon that the country is indeed in a recession.
The last two recessions were eight months each. The average is 10 months long. There’s a view that this one will be shallower than most but longer, going into next year.
To a certain extent, Maxwell Smart’s cone of silence needs to come down over the Nashville area, not so much that others can hear what’s being said under the cone but that folks here can’t hear what’s going on outside the cone.
The fact that Nashville has a diverse economy isn’t just economic development or Chamber babble used in selling companies on moving here. Economists have noted that Nashville’s economy never experiences huge swings. That is, it doesn’t get overly frothy nor does it sink deeply.
The area’s health care industry has a constant, almost anti-recessionary effect. State government and the universities here are a stabilizing factor. Then, there is religious publishing — texts of which folks seem to turn to more when times are bad than when times are good.
Music, manufacturing and distribution operations have big roles.
Nashville’s economy, for example, didn’t take near the hit peer cities took when the technology boom went bust in 2000 and 2001. Net job loss was minimal. But Austin, Texas, even with state government and a major public university, lost a lot of technology jobs.
Rising gas prices seem to have the most impact on psyche. Just watching the sign change to a higher price seems to make people quit spending altogether, even though the impact on the pocketbook is minimal.
A 10-cent per gallon rise in gas is $2 extra for a 20-gallon fill-up. Does that break the bank even if you buy gas twice a week?
If someone is running that close to the line financially, gas prices are the least of their concern. But there are people who will drive to a different area of town to save 5 cents a gallon.
If prices jumped a $1 or even doubled, then that would sound serious alarm bells and certainly bring a major shift in driving and public transportation use. Oil prices haven’t gone up lately because of supply and demand at the gas pump. It’s supply and demand of investors looking for a hedge against the devaluing of the dollar.
The summer driving season likely will add to it, however, and there will be more headlines about the price of oil hitting record levels.
Everyone is looking for a simple explanation to complex economic issues, but that explanation just doesn’t exist.
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