The Economist last week (Issue, April 30th-May 6th 2011) ran a cover story titled, “What’s wrong with America’s economy?”. It highlighted the glum mood of much of our populace and the general sense of malaise. The first sentence of the magazine did contain a prescient remark, “Pessimism about the United States rarely pays off in the long run”.
After a ten-year long search, the death of Osama bin Laden appears to be providing an important boost to Americans’ spirits, wearied by a long global conflict. This could develop into a deeper sense of self confidence and should have a least some positive impact even on our economic prospects.
Although first quarter real gross domestic product (GDP) growth was relatively weak at less than a 2.0% rate, growth should pick up to a pace averaging around 3.5% for the balance of 2011. The nation added nearly a half million jobs during the first three months and San Diego created 10,500 new positions. High oil prices will hurt, but stronger business confidence and profits, pent-up demand from consumers for purchases deferred during the recession, the stock market’s recovery, and low interest rates should all support higher business and consumer spending along with more jobs in coming months. A renewed sense of pride in America should reinforce these trends.