IT'S THE STUPID ECONOMY

Miami Herald: All of a sudden, the irrational exuberance of the '90s has turned into irrational melancholy. How quickly we forget the fundamentals. Of course the dot-coms were going to shake out. At some point the market was bound to adjust the values of overhyped companies, just as it has in the past.
It'll bounce again. Just look at last week's wild stock oscillations: up Monday, plunging Wednesday, soaring Thursday.
The fact remains that the United States has enjoyed the longest-lasting boom ever. Sense, and business cycles, dictate spurts and fits. Our economy is still growing, just not as impossibly fast as in heady 1999. Still, there's room for optimism, despite all the naysayers.
Economists don't all agree that we are headed for a recession, which technically means two consecutive quarters in which the economy shrinks. We haven't even seen one quarter of contraction yet. The Federal Reserve Bank cut interest rates, however. That's sure to boost investment and prevent more slowing, if not actually turn around the current slump. Further rate cuts shouldn't surprise.
Exaggerations: Lower rates encourage home-buying, which hasn't really taken a hit despite some moments of consumer doubt. Nor has consumer spending plunged. Layoff worries appear exaggerated, too. Consider that as many as 500,000 people nationwide lose their jobs monthly, even when the economy is growing. Most Americans are employed by small businesses, not by the high-tech companies going through the most visible troubles -- one reason unemployment hasn't risen materially. And productivity, an engine of economic growth, continues to rise.
Gloom and doom on Wall Street and in Washington just show how disconnected both are from Main Street, U.S.A. President George W. Bush hasn't helped, either, projecting dark prospects to push his $1.6 trillion tax cut. Such doomsaying, if continued, unfortunately could come true.
Stupidity: That's because -- to twist a phrase -- the economy is stupid. Without a brain of its own, it's the sum of all Americans' work and spending actions, which largely are psychologically driven. Enough dire predictions will scare people into expecting layoffs and cutting spending. Employers will curb business-expanding investments. And recession prophecies will become self-fulfilling.
The lesson here is to remember common-sense fundamentals. Resist getting swept up in hysteria, in good times or bad. This is certain: whichever cycle we're in, it'll change.