The media can't really deny the economy is doing great. But all good things come to an end,so what the heck, why not float the prospect of a looming recession? That's essentially what The New York Times did in today's paper.
Staff writers Eduardo Porter and Jeremy W. Peters turned to a Clinton economic adviser to suggest that the current economy is driven by a housing bubble similar to the tech bubble that drove the smokin' hot economy of the late 1990s.
“In both situations we had overinvestment, now in housing, then in fiber optics,” the Times reporters quoted Joseph E. Stiglitz,
’s "chief economic adviser from 1995 to 1997." Clinton
[I guess those silly 2001 and 2003 tax cuts that have resulted in record tax receipts from a growing economy and its resultant jobs growth have nothing to do with it.]
Porter and Peters persisted in peddling a discredited media meme: it's the housing "bubble" driving the economy, but in fact:
...economic growth outside of the housing sector is strong, arguing against the view that the slowing in the housing sector points to larger problems for the economy.
"The
economyoutside of the housing sector continues to expand at a healthy pace. Job growth remains good, and this has lifted consumerconfidence and spending. The weakness in housing has dampened the demand for commodities, and inflation has subsided,” Gary Thayer, chief economist for A.G. Edwards, noted in his January 2007 outlook. U.S. Thayer is not alone in his assessment. “The economy appears to be weathering the downturn in housing with limited collateral effects, and inflation appears to be easing with the aid of lower energy prices, well-anchored inflation expectations, and competitive labor and product markets, Federal Reserve vice chairman Donald Kohn told the Atlanta Rotary Club in a January 8 speech.
For more of my article, read here.
For our report from November 2005 popping the media's bubble on housing, check here.
