Recession not as bad as people think

Look the current recession in the eye and most folks see a demon engulfing the free world. This is not true.

Instead, the recession is one that has been kinder and gentler and on the mild side of mild. I know you doubt it, so here’s a chart to ponder. It’s a simple one.

Here’s how it works. Just add the unemployment rate to the inflation rate, total it and chart the total. The result is a so-called misery index that is a creation of an economist’s mind. The higher the number the worse things are.

As you can see, things were pretty bad in 1975 with both high unemployment and rising inflation. Ditto, but worse in 1980.

Today is a piece of cake, historically speaking, with both low unemployment and low inflation. The recession has been very mild. Yet this is not the public view, especially in Washington. Why?

I think we were economically spoiled by the boom years of the 1980s. That era saw a unique combo of a low economic starting point, unprecedented debt creation and a deregulation of business. Things have been so good for so long we think that’s the way it’s always been.

As well, the television media tends to dwell on the negative, in search of comments that start with “the worst” or “the lowest” or whatever. Unfortunately, this is not historically accurate with the present recession.

Such a mild recession is also why the stock market continues to soar to new highs.

Paul Jarvis is a stockbroker in Bangor with A.G. Edwards.