Neil Irwin
The Washington Post
Recent economic signs are “not pointing to a recession,” said Neil Irwin. But that’s not because of any new evidence of resilience in the U.S. economy. It’s because many vulnerable sectors “are already at such low levels that they don’t have much more room to fall.” Businesses have trimmed so much fat that they simply can’t cut further, and neither can consumer budgets. Of course, a major shock, like a big default in Europe, could pull us back toward recession. But on our own, it’s hard to get lower than we are already.
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Take housing. At the peak of the boom, Americans spent more than $800 billion a year on housing investments. Last year, they spent $327 billion. “Mathematically, it would be impossible for a new housing downturn to be as powerful an economic drain now as it was over the past several years; there isn’t $500 billion worth of housing activity left to vanish.”
The same dynamic applies to auto sales and other sectors. The economy is so lean right now that its only likely course is “continued, albeit slow, growth.”
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