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Warming economy needs a little fuel

MBJ Editorial

Economic doubt lingers in the minds — and wallets — of many Americans, and plenty of economists, business owners and politicians are wondering when the situation will change.

“The basic health of our economy in recent years, and most probably for years to come, is substantially better than it used to be. Inflation is low and steady, and expected to remain so. Productivity growth is up, and expected to remain so. Those are two key features of our economic situation over the longer run,” said Federal Reserve Bank of St. Louis president William Poole in remarks last week to the Midwestern States Association of Tax Administrators.

And what about reports that the economy might falter — the dreaded double-dip?

“From a historical standpoint, the likelihood of a double-dip is remote, since there’s been only one in the post-World War II era. The short 1980 recession was followed by a four-quarter recovery and then by the deep 1981-1982 recession,” Poole explained. But, the factors that spawned that double-dip — high and rising inflation, poor public policies and a major oil shock — aren’t present in today’s economy.

“Expectations of low and stable inflation are entrenched, and the banking system is well-capitalized, making credit readily available to credit-worthy firms,” Poole said.

Business is set for a solid recovery. Despite the recent spate of corporate scandals and fears of terrorism, the U.S. economy continues to show resilience and offer investors value. All that’s missing is a little consumer confidence.

Once Americans decide to let loose with their spending, we can expect to see an economy — and a nation — reinvigorated.

The best days are yet to come.

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