Monday, December 22, 2008

Don't lose hope

Bad times are the seeds for better times, provided the government follows well charted Keynsian economic policies.

Auto and trucks wear out over time. Sooner or later they will have to be replaced. And when the recovery starts, the demand will combine both the normal with the postponed.

Families are formed, grow and then shrink again. Their housing needs alter. They put off the purchase of a new home until things look brighter, and then suddenly the market picks up, and once again homes are sold at strong prices and new construction takes off.

Obviously this applies to clothing, home furnishings, roads and highways and just about everything else.

Better times are on their way, perhaps earlier than anticipated, provided we don't screw up. We don't think the incoming administration will do so. The economy may receive a psychological boost come inauguration day. And at this point of the cycle, it is mostly about confidence.