Tarzan confused

Tyler Cowen sums up what a lot of us are feeling right now:

The housing sector is down twenty percent and the price of oil is flirting with $90 a barrel, maybe $100 to come. Yet the quarterly growth rate was just reported at 3.9%:

The economy expanded faster than expected in the third quarter, led by a surge in consumer spending and exports, the government reported today.


It is wrong to think we have turned the corner, but it is also wrong to think the doomsayers understand what is going on.

I have been expecting a recession for several quarters now. So far, I have been consistently wrong.

Politically, I think this is going to make things very interesting. I presume a Democrat will be elected in 2008. The longer we go without a recession now, the more likely it is that whatever Democrat we elect will have a deep recession during their presidency, something that hasn't happened to them since Carter. Cactus may think the Democrats have some magic economic mojo, but I'm betting on the business cycle. Don't get me wrong--we've still got a year to go, and I think it's more likely that Bush will catch the end of the current expansion than his successor.

The next term is going to be pretty interesting, in terms of watching what wonks say about presidential impacts on the economy. If Bush doesn't end up with a recession on his watch, the next person in office will almost certainly catch a nasty twofer: a deepening hole opening up in the budget due to entitlements, and a recession that will make any such problems desperately worse. I expect a neat (and amusing) flip between Democrats proclaiming that deficits don't matter, and anyway, the president has limited power over the economy; and Republicans righteously screaming about fiscal responsibility.

Presented by

Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

Why Is Google Making Human Skin?

Hidden away on Google’s campus, doctors at a world-class life sciences lab are trying to change the way people think about their health.

Join the Discussion

After you comment, click Post. If you’re not already logged in you will be asked to log in or register with Disqus.

Please note that The Atlantic's account system is separate from our commenting system. To log in or register with The Atlantic, use the Sign In button at the top of every page.

blog comments powered by Disqus

Videos

Why Is Google Making Human Skin?

Hidden away on Google’s campus, doctors are changing the way people think about health.

Video

How to Build a Tornado

A Canadian inventor believes his tornado machine could solve the world's energy crisis.

Video

A New York City Minute, Frozen in Time

This short film takes you on a whirling tour of the Big Apple

Video

What Happened to the Milky Way?

Light pollution has taken away our ability to see the stars. Can we save the night sky?

Video

The Pentagon's $1.5 Trillion Mistake

The F-35 fighter jet was supposed to do everything. Instead, it can barely do anything.

More in Business

Just In