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Dire Commentary on the U.S. Economy Overblown

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For Mark Hirschey, Professor of Business at the University of Kansas, much of the negative press on the U.S. economy is "significantly overblown." Hirschey is the co-author of Investments: Analysis and Behavior (McGraw-Hill, 2008), a textbook on behavioral finance with an introduction to the field of investments. This KU economics research expert has written hundreds of other scholarly economics publications. Hirschey advances several contrarian perspectives on gloomy economic headlines:

On the Stock Market: "On average, stocks go up." His historic view of U.S. equities is that they advance slowly and steady, but every so often these markets experience a drastic, unpredictable decline. He claims those events are exceptional, infrequent, and relatively short-lived. The 2008 decline represents the ninth such event in the last 50 years. He expects prices to be much higher 18 months from that dip's start.

On Housing Price Declines: The bust in home prices is "not uniform across the United States." Prices have been little changed in 34 of 50 states. That fact is rarely highlighted in news of the current housing price slump. The largest price declines occurred in California, Nevada, Arizona, and Florida, but nationwide prices are only off by nine to ten percent from their highs. In those markets hardest hit, some homeowners have seen 25 to 30 erosion in their equity. In fact prices are now rising again in one fifth of the major housing markets.

On The 1920s and 30s: “The Great Depression and the current economic situation have very little in common." In most areas we see unemployment rates in the six to seven percent range and most agree that eight percent will be the maximum rate during this dip. From 1929-1933, unemployment in the U.S. increased dramatically from four percent to 25 percent.

On The Timing of a Recovery: "The typical recession lasts less than 18 months." Again using history as a guide, Hirsch sees this downturn ending sometime between now and Independence Day.

Thanks for the Good News Professor!

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About gne1963

  • http://www.joannehuspek.wordpress.com Joanne Huspek

    Interesting. The “Good News” economist has obviously never been to Michigan or Ohio.

  • http://goodnewseconomist.com Good News Economist

    Hi Joanne,

    Thanks for reading and commenting.

    In fact I have been to both states… Ohio quite frequently. I have relatives in Youngstown, Dayton, Yellow Springs, and Bluffton. Also have some friends just outside of Cleveland. My best friend lives close to Columbus. I try to visit one of those locations about once a year. (Unless some of those dear ones come my way or I get an overdose of them on facebook!)

    Last time I was in Michigan was to visit the dunes on Lake Michigan. Have you been there? The lake and the dunes are amazing…

    GNE
    goodnewseconomist.com

  • bliffle

    I’m sure that this article would be a great comfort to the millions of Americans who have lost their jobs, or their homes, or their health insurance.

    Perhaps GNE should make a mass printing and fly over the newly poor in a helicopter, distributing his encouraging pamphlets. Perhaps he could also send along some free food at the same time. Perhaps some turkeys. What a wonderful thing that would be, releasing turkeys from his helicopter!

  • http://goodnewseconomist.com Good News Economist

    @bliffle,

    I’ve never flown in a helicopter, but I did find a great deal on Thanksgiving turkey dinners in the local Dayton, Ohio Albertson’s last thanksgiving.

    The folks at the deli there were hard pressed to keep up with the volume of business.

    gne

  • http://www.itonion.com ITonion

    This is exactly the need of the hour. All US needs is confidence and the resulting money flow. No stimulus package (or) bailout can jump start the economy, unless people get some confidence through good news like this.

    But, my only worry is on the treasury bond sale by US. I am afraid, if the frenzy bond market would create another mess.

  • http://goodnewseconomist.com Good News Economist

    ITonion,

    You are right on. Much of what is going on right now is lack of confidence…

    If the US economy is to succeed in the long run, US citizens will need to chose hope over fear and creative innovation over apathy and cower.

    gne

  • http://drdreadful.blogspot.com Dr Dreadful

    1. What’s this doing in Culture?
    2. Finally somebody gets the BIG big picture.

  • Bliffle

    I can just imagine the news reports as GNE in his Good News Helicopter showers the public with his blessings. Thanksgiving time would be appropriate.

    Here’s Les with the news report:

    Oh the Humility!

    Straight from Cincinnati.

  • http://goodnewseconomist.com Good News Economist

    @Bliffle who is standing by at WKRP… can you provide me with the helicopter and perhaps pilot us?

    I think I know where to get the turkeys.
    Get your turkeys here…

    And if we can not get enough up there, I know of several other places closer by Cincy that can provide us with good stock.

    gne