What do you want first, the good news or the bad news about the U.S. economy?
Initially, she sketched out some of the grim economic news with which we’ve become all too familiar: persistently high unemployment, sequestration, policy gridlock in Congress, growing government debt and an aging population.
“If current debt and policy remains, government debt will be 415 percent of GDP by 2050,” Bovino said.
Want more bad news? American households lost 39 per of their family assets during the recession.
“We lost 20 years of net worth in just two years. That loss made people stop spending,” Bovino said. “The middle class was hit the hardest. They lost more than 40 percent of their wealth because most of their assets were in real estate.”
But, she added, there’s good news, too. Europe’s problems are not as bad as was feared, China’s ills may not be escalating, there seems to be a growing consensus in Congress not to face off over the debt crisis, and cheap natural gas is spurring manufacturing.
“After four years of mending our financial houses,” she said, “housing is strong, the job market has improved and manufacturing is coming back because of all the natural gas production.”
And, she added, channeling Mark Twain: “News of the Fed's tightening is greatly exaggerated.”
Bovino also said to take a housing bubble off your list of economic concerns. “Bubbles are an issue but not yet,” noting prices are still 25 percent lower than 2006.
The energy area may be the most surprising development for anyone not following the sector in the past few years. The United States, Bovino pointed out, will pass Saudi Arabia in five years as the world’s largest producer of energy.
She said S&P now believes the threat of a new recession, recently 1-in-4, is now1-in-10.
The big surprise for most economists, she added, is how resilient the U.S. economy has turned out to be.
“We think the positives outweigh the risks.”
And that’s good news.
Ed Smith is the director of digital communications for NCSL.