Economists expressed surprise last week when the University of Michigan consumer confidence index fell in September despite strong economic performance. How strong? Very.
Over the past year, the economy has grown more than 4.8 percent with GDP hitting an all-time high last quarter. Retail sales are up 3.6 percent. Investment in housing, capital goods and technology, as well as imports and exports are all showing double-digits gains. Consumer prices are up a mere 2.6 percent despite rising oil prices. On the jobs front, unemployment has dropped from 6.1 to 5.4 percent.
By just about any measure, the economy is demonstrating stellar performance. So perhaps it's the situation overseas that is putting everyone in such a foul mood. But even on that front there are encouraging developments.
Forces loyal to radical Shiite cleric Muqtada Al Sadr have begun turning in their weapons as part of a cash-for-weapons exchange. The Washington Post reported last week that the insurgent alliance in Fallujah is coming apart at the seams as local residents have become repulsed by the grisly beheadings and car bombings carried out by Abu Musab Zarqawi and his foreign-born supporters. The sentiment is that if the foreigners won't leave on their own, they'll push them out by force.
Meanwhile in Afghanistan, democratic elections took place with nary a hint of the expected violence. Even the threatened opposition boycott to discredit the vote turned out to be nothing more than talk.
So, if the economy is roaring at home, our opposition is fraying in Iraq and democracy is winning in Afghanistan, why is consumer confidence tumbling? Simple. We have two presidential candidates spending about a half a billion dollars between them telling us how awful things are and how much worse they'll be if the other guy wins. And that doesn't include the cash spent by special interest groups like MoveOn.org and the Swift Boat Veterans.
The truth is that things at home are going pretty darn well, while overseas we're making steady progress in a tough fight that will serve us well in the long run. Polls suggest we're heading in the wrong direction. But the last time we had an overheated economy and crash of an irrational stock market like the one we saw to close out the 1990s was in 1929. That one resulted in the Great Depression. By contrast, we're in remarkable shape today given the circumstances. We shouldn't let any amount of negative advertising obscure that fact.
Paul Szydlowski is a freelance writer and owner of a dry cleaning firm. He lives in West Chester Township with his wife and two children.
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