The Economy: Why All the Panic?

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For the last couple of weeks, all we have heard is how bad the current economic situation is. “The markets are going to crash and interest rates are going to skyrocket.” Panic has definitely engulfed the entire country.

Consumer confidence, as measured by the University of Michigan’s Consumer Sentiment Survey, has fallen to a number not seen in thirty years. This panic has actually had a negative impact on the economy.

It was said best by Mark Zandi, chief economist at Moody’s Economy:

“Confidence normally reflects economic conditions; it doesn’t shape them…

Yet at times, particularly during economic turning points, cause and effect can shift. Sentiment can be so harmed that businesses, consumers and investors freeze up, turning a gloomy outlook into a self-fulfilling prophecy. This is one of those times.”

What does the data actually show?

We decided to look at certain economic indicators and compare them to the numbers from a year ago. Here is what we found:

We are not making the argument that the current numbers are worth celebrating. We are only suggesting that the sky is not falling.

Bottom Line

Conditions aren’t as dire as some are professing. Make good sound financial decisions based on your own economic conditions. There is no need to panic.