An Antidote to Economic Pessmism

By January 6, 2008Economy

Iriwn Steltzer of the Hudson Institute, writing in The Times (U.K.), “The American giant always bounces back“:

The American economy is an amazingly resilient and flexible machine. Remember the dotcom bust, which is cited as the model for what we are about to go through? Since that dreary period the American economy has added 8m jobs. In real, inflation-adjusted terms, the value of the goods and services produced in America is about 15% higher than during the dotcom bust. And even after the precipitous drops of recent days, the leading share-price indexes are healthily up over dotcom-bust levels: the Dow Jones and Standard & Poor’s by about 70%, and the Nasdaq index of high-tech shares, although still far from its prebust high, by about 110%.

If you need any further proof of the ability of the American economy to survive and thrive after taking a blow, consider the speed with which output, employment and every other indicator rose soon after the devastating attack on September 11. Or after hurricane Katrina. Or ask yourselves whether you can identify the enduring impact of the following events during the Clinton years, now remembered as a golden age: the Mexican peso crisis, the Asian financial crisis and what scholars now call “the crisis of confidence and legitimacy of the international monetary and financial system”.

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