Let’s face it, the last few years have been rough. I mean double-digit-unemployment, house-value-depreciation rough. And while I have maintained for a while that the Michigan economy is a kind of a “canary in the coal mine” when it comes to predicting what’s coming for the rest of the country, it is GREAT to see an article like this one from the New York Times on Sunday, April 25th.
Despite worries that American consumers might hunker down for years â€” spooked by debt, lost savings and unemployment â€” thriftiness has given way to the outlines of a new shopping spree: households are replacing cars, upgrading home furnishings and amassing gadgets.
The key question is whether this burst of consumption will prompt businesses to hire, adding paychecks needed to amplify economic growth and replace the eight million net jobs lost in the course of the recession.
Optimists suggest this is already unfolding, pointing to the addition of 162,000 net jobs in March, the biggest surge of hiring in over two years. In this view, job growth amounts to a corrective after excessive layoffs during the worst of the crisis.
â€œYou didnâ€™t fire people because you had a judicious plan about how to run your company,â€ said Robert Barbera, chief economist at the research and trading firm ITG. â€œYou fired pell-mell, because you were afraid you were going to lose access to credit.â€
Now, he argues, companies are guided by a new anxiety that demands hiring: fear of missing out on the profits of fresh growth.
Still to come, he added, is a wave of spending from American businesses.
â€œThey are awash in cash,â€ Mr. Barbera said. â€œTheyâ€™re in a position to step up spending across the board.â€
This is NOT to say that Michigan has necessarily turned the corner, it clearly has not.Â Rather, this is simply one agent in Plymouth, Michigan that found an article that shines a glimmer of hope on our current economic situation.Â The absolute loss of value in property will take years to replace, even with moderate to high property appreciation.Â The fulfillment of hope – the hope that this won’t last forever, that the economy will turn around -Â is what this article highlights.
We may not be out of the woods yet, we may not be close to being out of the woods, but at least we can now see some light shining through the end of the forest.Â Now, if we can only dodge the proposed national Value Added Tax (VAT) and get some more job creation going…