Let me be the first to wish Ben Bernanke’s “green shoots” a happy 5th birthday. I am, admittedly, jumping the gun a bit, given that the big day of that now-infamous proclamation is about two weeks away.
In case you don’t remember, the former Federal Reserve chairman told CBS’s “60 Minutes” back on March 15, 2009 that he was already seeing the “green shoots” of an economic recovery following the financial calamity of 2007-08.
“We’ll see recovery beginning next year,” Bernanke further proclaimed, “and it will pick up steam over time.”
There hadn’t been a TV interview of a sitting Fed chairman in 20 years, and its purpose was made clear when Scott Pelley asked a loaded question: Was the US about to repeat the social and financial experiences of the Great Depression?
“I think we’ve averted that risk,” Bernanke answered, and a collective “whew” was heard across the land.
Bernanke was right, the recovery did start soon after that interview. The Great Recession, as it came to be called, officially ended three months later.
But he was also wrong: The economy didn’t pick up much steam.
In fact, growth has been so frail and job creation so weak that the Fed had to take the highly unconventional, extremely dangerous step of loading the US with new money. Quantitative easing had already been born the previous November, with two more doses to follow.
Eventually the Fed would be printing $85 billion in new money each month so it could act as Washington’s shill at government-bond auctions. And still the economy sputtered, despite record spending and interest rates that couldn’t get any lower if they had a shovel.
I’m bringing this up as a precaution against undue optimism, because our leaders are starting to see those green shoots again.
This idea arrives every year around this time, and despite the fact that all sorts of indicators have been lousy for months — retail sales, mortgage originations, housing sales, job growth, industrial production, to name a few — the “get happy” crowd in Washington is spreading manure for its annual planting.
You’d almost think that organizations like the Fed use a calendar instead of economic models for their forecasting.
At its January policy meeting, for instance, a few Fed officials argued that increases in interest rates might be needed to prevent the economy from getting too hot.
C’mon!
And since the green-shoots image was already taken, John Williams, head of the San Francisco Fed, told CNBC a few weeks ago that despite some “relatively weak” reports the US economy is on a “really solid footing” for growth this year.
Oh, c’mon! Just because that part of the country has another tech bubble inflating, Williams thinks everybody is blowing one.
Really solid footing, I believe, implies something even better than green shoots. Really solid footing is, in fact, only a step or two away from the grass needing a trim.
We’re going to have to endure more of this kind of talk in the months ahead. Pundits always predict better times when we head into spring. It’s like they’re trying to tap the American farmer in each and every one of us.
And if the reports continue to be weak, the “experts” will blame the winter weather. Yep, Mother Nature ate our prosperity.
By the way, here’s a second 5-year-old birthday: The stock-market rally, give or take a few minor corrections, is the bastard child of QE that was born in that field of green shoots.
This is perhaps the dumbest of all economic news, but I’m going to report it anyway because I have a fondness for fairies.
Visa, the credit-card company, says the Tooth Fairy became a lot more generous last year. A survey — of whom, I don’t know — shows that kids got an average of $3.70 per lost tooth in 2013, compared with just $3 each the year before.
And the going rate for a lost tooth was just $2.60 in 2011.
So add the Tooth Fairy to those participating in economic bubbles.
I don’t really believe in the Tooth Fairy. So that’s probably why I have my doubts about a report that circulated widely this week that said childhood obesity dropped 43 percent in the past decade.
According to a federal study, the number of kids in the 2-to-5-year-old age group who were obese dropped from 14 percent in 2004 to 8 percent in 2012.
The experts generally said they were shocked. I’d be shocked if the referees don’t take a look at the replay and reverse the call.
Personally, I’d like to see the results for kids who are old enough to play video games and hang out on social media sites during all their idle hours. Toddlers aren’t the prime age group being left to entertain themselves in front of multiple screens (which, incidentally, are some of my fondest moments as a kid).
I’m still waiting to hear from the New York State Tax Department about when, if ever, it will try to stop merchants from “zapping” sales to avoid paying taxes.
I wrote about this several years ago, and nothing was done in Albany. I figured that, surely, the tax people of this under-revenued state would take swift action.
Then again, I can be accused of being a hopeless romantic when it comes to common sense in governance.