Is the Economy Really On the Mend? – RantAWeek
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Is the Economy Really On the Mend?

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Posted by Tyler Miksanek on March 9, 2013 at 4:05 pm

The Dow Jones Industrial Average, a basket of stocks that is often used as a bellwether for economic health, broke 14,000 back in the fall of 2007.  Less than two years later, it had plummeted to less than half that value.  But recently, the Dow Jones proved to everyone that not only had it recovered from this serious stumble, but it was actually doing better than ever.  On March 5, the Dow Jones broke its previous record high from the fall of 2007, meaning that is actually worth more now than it was pre-recession.

Of course, just because a commonly cited indicator of the stock market is back to pre-recession levels does not mean the economy as a whole has recovered.  That being said, the Dow Jones was not the only good economic news as of late.  The other half of the story lies with the recent release of February’s unemployment statistics.  In February, payrolls increased by an unexpectedly high 236,000 jobs, sending the unemployment rate down to 7.7%.  All the economic signs are appearing rather rosy, and its not hard to assume that our economy might once again be clear of serious headwinds.

Unfortunately, unchecked optimism is just as risky now as ever.  While the economic headlines might paint a pretty picture of economic recovery, these headlines are still set against a backdrop of economic insecurity.  Take those unemployment headlines, which are quick to talk about the new jobs created but mostly skip over the fact that the labor force actually shrank by 130,000 jobs in February.  Clearly, not all the current economic numbers yield optimistic conclusions about the state of the economy.

Worse still, government leaders have gotten our economy into an even more shaky situation.  Budget cuts due to the sequester have yet to be stopped, and this sudden cutback in government spending could throw the economic recovery off balance.  If Congress wants to oversee a stable economic recovery, they should start off by passing sensible economic legislation.  The instability caused by the unresolved sequester, in addition to the lack of clear economic policy coming from Congress, means that government is far from ensuring economic stability in both the short and long term.

And even though we’ve made some gains in the fight against unemployment the last few months, we are still far from solving the unemployment problem.  While unemployment is down from a high of 10% back in 2010, it’s current 7.7% level is not even close to the 4-5% unemployment expected in a healthy economy.  Just because we’re recovering does not mean that we are recovered.

That being said, the current economic indicators are still showing a recovery, and while the recovery may not be as straightforward or as fast as we would like, some economic momentum is better than none at all.  A few years ago, we had almost nothing to be optimistic about economically.  And while the data is far from perfect now, we at least seem to be moving in the right direction as a whole.  While its not time to get out the party hats just yet, we may be able to put those doomsday signs back in storage.

Filed under Domestic, Economy
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