http://www.investors.com/editorial/issues.asp?v=7/18Moving Ahead
INVESTOR'S BUSINESS DAILY
Economy: It's official: The U.S. is no longer in a recession. It ended way back in November 2001 20 months ago, by our count. Time to move forward.
To listen to some critics, you'd think the U.S. was still deeply mired in a slump. In fact, as the data clearly show, the economy began to slip back in mid-2000. And the recession, which began March 2001, lasted just eight months.
We hate to toot our own horn, but in October 2001, just a month before the economy emerged from recession, our monthly IBD/TIPP Economic Optimism Index told you so.
Our data shocked some and elicited comments of disbelief from others. The index showed that, just one month after the Sept. 11 attack, Americans' optimism in the economy had soared.
Why? Amid the gloom and shock of the post-9-11 period, average Americans knew something the media didn't: that out of the death and uncertainty of the terror attack, a stronger, better America would emerge.
And that's just what's happened. Americans have rolled up their sleeves, struggled through the tough times and are now getting the economy going again through hard work and big dreams they refuse to let die.
But they've had some help.
As the chart shows, President Bush inherited a weaker-than-normal economy.
His first round of tax cuts, which not coincidentally went into effect in 2001's fourth quarter, pulled the economy out of its tailspin. Congress' second round of tax cuts this year are now kicking the economy into high gear.
Let's also give the Federal Reserve its due. Once it understood its huge mistake in jacking up interest rates back in 1999 and 2000, it got religion in early 2001 and slashed rates 12 times to 45-year lows.
So where does that leave us now? Despite the gloom and doom of those who, for political reasons, are talking down the economy's growth prospects, things look pretty good.
Yes, the recession is over. The stock market is again rising. Housing remains solid. Consumer optimism has turned bullish again. Retail sales are growing. Inflation's dead. Productivity is surging a source of future gains in our standard of living.
As for jobs, the perennial weak spot in recent recoveries, we must admit there's some shakiness there. Still, even as the number of payroll jobs is shrinking, the economically sensitive household jobs survey shows growth 251,000 jobs last month alone. And that's the job barometer that's the first to turn in a recovery.
We also see signs of life in the rise of a key jobs indicator put out by the National Federation of Independent Business the group that represents the nation's small businesses. Remember: Small business, not the Fortune 500, creates virtually all new jobs in America.
Like others, we have worries and see big challenges ahead. But we may be on the cusp of a new era of growth. And that's exciting.
