I had a manager once who always said, â€œPerception is reality.â€??Â My experience tells me this is generally true.Â But is it always?
Our economy is all about money and when people consider money, some switch in the brain goes off and emotion overtakes logic.Â Emotion does seem in charge these days.Â The general perception of people is that we are not doing well economically.Â Some seem to indicate that we are down the proverbial toilet.
Then, particularly in an election year, the politicians jump on board that emotional train.Â Itâ€™s knee jerk time!Â Even the President is joining in.Â According to an item in todayâ€™s Wall Street Journal, President Bush is all set to unveil a relief plan for homeowners.
Without a doubt, the sub-prime mortgage mess is just that, a mess.Â But shouldnâ€™t the situation be presented with some perspective?Â Shouldnâ€™t we consider the overall picture, with, dare I say (Dare! Dare!), the facts?Â According to more measured reports I have heard, most borrowers are managing to make their payments just fine. Â Yes, there are foreclosures, but we need to look at how many in the overall context.
The stock market sure has been volatile lately, too, further exacerbating the general perception of economic malaise.Â Looking again at todayâ€™s online Wall Street Journal, a headline states, â€œStrong Data Gives Stocks a Boost.â€??Â The article itself opens with the following:
â€œStocks advanced, supported by benign economic readings and continued belief that the Fed is likely to deliver another rate cut next week.â€??Â (Emphasis is mine.)Â
â€œBenign economic readingsâ€???Â According to Dictionary.com, one meaning of the word is â€œfavorable; propitious: a series of benign omens and configurations in the heavens.â€??Â The American Heritage Dictionary offers additional perspectives:Â
Â·Â Â Â Â Â Â Â Â â€œTending to exert Â a beneficial influence; favorable: a policy with benign consequences for the economy.â€??
Â·Â Â Â Â Â Â Â Â â€œHaving little or no detrimental effect; harmless:Â a chemical additive that is environmentally benign.â€??
So maybe we should take a deep breath before we panic and look more carefully.Â Job creation has been excellent and fairly steady.Â Unemployment rates are very low across most of the country.Â The economy is still growing.Â Even federal tax revenues are up significantly, reducing the national debt faster than anticipated.Â And this after taxes were cut and during a time when our country is at war!Â
There was a great article in the November 19th edition of Newsweek, written by George F. Will.Â It is entitled â€œPeru and Other Menacesâ€?? and talks about applying more reason to our view of the economy, and especially the potential actions of our government.Â I highly recommend it to you.Â He closes with the following:
â€œPresidential elections are always epidemics of economic illiteracy and hysteria, for two reasons:Â The party not holding the White House has an incentive to talk gloomy nonsense, and the media, for whom the phrase â€œgood newsâ€?? is an oxymoron (â€œWe donâ€™t report the planes that land safelyâ€??), love crises.â€¦Â That can, however, be self-fulfilling:Â Worried people curtail consumption, wary businesses defer investments.Â Everyone should remember the witticism that the stock market has predicted nine of the last three recessions.â€??