Live Big® Digest – September 10, 2010

The U.S. economy remains almost comatose.  … The current slump already ranks as the longest period of sustained weakness since the Great Depression.  … Once-in-a-lifetime dislocations … will take years to work out.  Among them: the job drought, the debt hangover, the defense-industry contraction, the (banking) collapse, the real estate depression, the health-care cost explosion and the runaway federal deficit.That’s how Time described the dismal state of the U.S. economy – in September 1992 . The passage has been making the rounds in financial circles, a token reminder that today[s pessimism – the forecast of a “lost decade” for U.S. employment by Pimco CEO Mohamed El-Erian, for example – may turn out to be too extreme.

Almost before that Time article reached the recycling bin, the U.S. economy was humming again. Real gross domestic product rose 4.3 percent, both in the fourth quarter of 1992 and on a year-over-year basis – and for the rest of the decade America never looked back. The recession that officially ended in March 1991 lasted just eight months, one of the shortest U.S. downturns ever; it took another year to produce consistent job growth. Soon, however, the jobless recovery that helped elect Bill Clinton in 1992 ushered in a decade of prosperity, with 23 million new jobs created. By the spring of 1997, unemployment had fallen below 5 percent – a 24-year-low – yet inflation was holding steady at around 3 percent, with consumer confidence near an eight-year high. No wonder Clinton was beginning a second term.  (Businessweek, September 9-12, 2010)

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The above are the opening paragraphs of an interesting piece that appears in the latest issue of Businessweek.  The article goes on to highlight the many ways in which our current conditions differ from those in 1992, but it serves nonetheless as a timely reminder that the future that seems so obvious in the present moment will likely prove a surprise.