May 18, 2009
Green Shoots
Posted by Gordon Smith

On my morning walk to work, I listen to the previous evening's episode of Marketplace. That means I listen to Friday's episode on Monday morning, which has the special pleasure of allowing me to observe how much difference a weekend makes. Remember that last Friday was a real downer for the stock market, so "The Weekly Wrap" (this week Kai Ryssdal spoke with Mike Mandel and Megan McArdle) was depressing. A sampler:

McArdle: I think that this week, the green shoots started to look a little brown and straggly....

Mandel: I think the stock market is probably close to a bottom and we may see gains in GDP growth toward the end of this year.

But the housing market's going to be dead for years. I don't even look at the housing numbers; I just assume that we're years away really from any recovery there.

The real question is the job market. And the fact is we're in the middle of a total collapse of the professional, college-educated labor market that we have never seen before. And I think the labor market is going to be bad for quite some time. And that's really kind of the big problem now....

McArdle: I think a lot of people have in their head the post-World War II recession model and that's not the kind of recession we're in. Financial crises, they look different. They're a little bit more idiosyncratic.

But you know, the average recovery time from a financial crisis is that things get worse for at least two years. Well the financial crisis was last fall, which would seem to indicate that we've still got some run yet.

News flash for Mike Mandel: the stock market has been on the rise since early March. As for the housing market, check this morning's headlines: "U.S. home builders brightened a second consecutive month, buoyed by record affordability." The job market for professionals? Still bad, but the worst is behind us. These jobs will come around quickly once the banks get their collective act together.

Megan McArdle is pointing to the unique problems associated with financial crises, but financial crises seem uniquely susceptible to rapid correction. It's the manufacturing crisis (read: automobiles) that is really troubling. Nevertheless, we have lots of indications that credit markets are thawing (even though Treasury has yet to implement PIPP), and the IPO market is showing signs of life. Even Google searches suggest that brighter times are coming back.

So enough of these nattering nabobs of negativism! The sun is shining in Utah, and I am seeing green shoots.

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