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Ever the Economic Optimist


If you ask the average American, their belief in the economy is shaky at best, with consumer confidence in May at its lowest point since October 1992 – when the United States was coming out of recession. But I’m not joining that parade. I see little silver linings on the economic cloud just around every corner.

There’s sound economic theory for my hopefulness. From September to February, the U.S. Federal Reserve engaged in an aggressive series of interest rate cuts in order to fight off a coming economic slowdown. In theory, the liquidity injected into the markets should take about six months to cycle through and result in economic benefits. Meaning, we should start seeing the economy turn over the summer. And I think we are.

My first indication that the economy was improving came a few weeks back when in my email inbox I received an unsolicited job offer from New York City. Apparently the company was looking to expand and could not find enough qualified local employees.

Since then, I have received two similar emails from recruiters trolling the message boards of and contacting me – through a profile that had not been updated in three years. Either my late-20′s skill sets are now in hot demand for jobs ranging from Internet marketing to energy lobbying, or businesses are expanding and desperately seeking skilled workers. Being the humble person that I am, my bet is on the latter.

I see signs of an improving economy when I looked at Los Angeles over the Memorial Day weekend. From what the media told us, high gas prices and a slow economy meant that travel over the holiday was going to slow down. But look around Sunset and Santa Monica boulevards over the Holiday and you’d have thought it was a ghost town – locals packed up and left in large numbers.

Looking at my Facebook friends, I can tell you that, unscientifically, they’re not hurting economically, either. They are traveling to Minneapolis, New York, London, Chicago, Ireland, Puerto Rico, the Dominican Republic, Florence, Manchester and Cairo – and that is just from the first two pages of their status updates. Maybe that says more about the Facebook “friends” I choose, but it tells me something about the state of the economy, too.

And despite the weak dollar and allegedly weak American economy, I sure saw a lot of Americans as I did a tour of major European airports traveling to and from Paris, France before the holiday weekend. Security lines at London Heathrow, Frankfurt-am-Main and Zurich’s Kloten airports were congesting with octogenarians with fanny packs and white socks – the usual tell-tale signs of the American tourist abroad.

Compared to a 4.20 Euro Caffe Latte at Starbucks in Paris – that’s $6.40 in George Bush Pesos – food inflation in America is de minimus. When American tourists return home to see that gasoline still costs about half of what the Europeans are paying and that food is but a fraction of what it costs abroad, the idea of inflation seems relative.

Sure, the cost of gas and food and airfares are going up. But these prices can only be supported if people are able to pay them. And each time an airline announces a new price hike or fee increase they do so only because they believe people will be willing – and able – to pay. That does not sound like a recession to me.

In a few months time, you can accuse me of wearing rose-colored glasses. But I am betting you won’t. In economic theory, the liquidity injection – that’s extra cash – started when the Federal Reserve began cutting interest rates last fall should be kicking in just about now.

Indeed, everywhere I turn, there’s reason to be an economic optimist.

Share  Posted by Scott Olin Schmidt at 7:53 AM | Permalink

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