Don’t even talk about a recession

By JAY AMBROSE

SCRIPPS HOWARD NEWS SERVICE

It’s just barely noticeable at the moment, a slight little tap, tap, tap on the door, but yes, maybe, possibly, a recession wants to intrude on our good economic times, and there are ways to make that happen. First off, fail to recognize the times are good.

Lots of politicians and others are doing just that, moaning and whining and carrying on as if we did not live in one of the most materially blessed periods of human history, an age of unparalleled communications, transportation, health, education, occupational opportunities, general affluence and conveniences few in the past even imagined and none enjoyed.

Not everything always goes smoothly, and not everyone fares as well as most do, but that has always been the case, in every era throughout history, and in every place, and there are dangers in overstating difficulties. You might then take unwarranted, extreme actions that undo what produced abundance in the first place, or you begin to destroy the confidence always necessary for an economy to keep advancing, producing more goods and services for more people, helping to lift more and more out of any semblance of misery.

Reckless talk about a recession can help produce a recession by causing retreat -- businesses may quit taking the risks required for growth, for instance. It obviously doesn’t follow that anyone should ignore reality. There has lately been a slight but worrisome signal that a recession could be in the offing: a decline in payroll jobs of 4,000 in August. Because of the housing slump and such consequences as less residential construction, devalued homes and tight credit, economic growth could start slowing to a point of still more drastic job losses. In one reported survey, economists say the chances of a recession are one in three.

Reserve to the rescue

But an expected mid-month lowering of interest rates by the Federal Reserve could serve business expansion and consumer spending, with the results visible in about a half-year or so, and a sense of perspective could calm nerves. Manufacturing and services are expanding, the government reports. And as an analyst at the Heritage Foundation points out, unemployment remains at extremely low rates, while leisure time and compensation for working Americans have been increasing.

Just in the past year, says James Sherk in a Web piece, benefits and pay combined have risen 3 percent above inflation.

“Workers’ standards of living have also increased in ways that do not show up in employment statistics,” he writes. “Contrary to popular perceptions, Americans today work fewer hours and enjoy far more leisure time than they did a generation ago. Between 1965 and the present, the amount of time the average working-age American spent working at home and in the marketplace fell by 8 hours a week. During that same period, the amount of time that working-age Americans spent enjoying leisure activities — entertainment, social activities, relaxing, napping, eating and playing with children — rose by 7 hours a week.”

The last thing you want, Sherk and others warn, is for Congress to go bonkers, which would be an apt description of its mental state if it raised taxes right now to expand federal activities or finance some fancy new program. The Bush tax cuts have served the economy splendidly, helping to give us an additional 8 million new jobs over the past four years despite rising oil prices, Katrina and other tribulations. The need is to boost industry — keep regulations down and energy availability up, among other things.

What is further needed is decisiveness by the Fed, action of a kind President Bush recommends to help people renegotiate housing mortgages without undue market interference and a recognition that ours is a powerful economic instrument that can serve us well if we appreciate that it got that way through crucial freedoms allowed under stable rule of law.

X Jay Ambrose, formerly Washington director of editorial policy for Scripps Howard newspapers, is a columnist living in Colorado.