The Case for Economic Optimism

Alan Blinder, a Princeton economics professor and former vice chairman of the Federal Reserve Board, says the economy is on its way out of the recession. First, he writes in The Wall Street Journal, the GDP is showing some evidence of a "slingshot effect," during which it rises rapidly. When component GDP is taken into account, GDP growth over the last year has taken a 6.7 percent swing upward between the first and second halves of the year. The economy is showing amazing productivity; with that rate growing in the nonfarm sector at a "shocking" 8.1 percent rate. Payrolls pared to the bone will create a need to hire more workers as sales grow. Plus, less than 30 percent of February's $787 billion stimulus has been spent and, as Blinder puts it, the effects of "the Federal Reserve's stupendously expansionary monetary policy" aren't likely to hit for another year, thanks to time lags between policy changes and real-world results.