Willy Loman Economics

No matter what it is, it's a good sign. The market is always wonderful.

Which is recovering, Europe or America?
There are four choices: The EU, the U.S., both, or neither.

   The U.S. seems to be in recovery mode, but even that is no guarantee that the economy actually is sound and on its way upward. The unemployment rate is basically steady, as the nation added 175,000 jobs last month. The jobless rate itself ticked up a notch, but that could be because discouraged workers have renewed their search.

   Granted, there have been good signs and omens. The Federal Reserve, in its quarterly Beige Book of economic analysis, reported that "Overall economic activity increased at a modest to moderate pace since the last report." And in its yearly report of state performance, the Fed said gross domestic product (GDP) "increased in 49 states and the District of Columbia in 2012," with durable goods manufacturing, finance and insurance, and wholesale trade leading the way. The only state that did not show growth was Connecticut, where GDP was off by 0.1 percent. The Fed noted that nationwide, GDP by state grew by 2.5 percent last year. North Dakota posted a roaring 13.4 percent increase in GDP.
   In the first quarter of this year, national output increased by 2.5 percent, according the Bureau of Economic Analysis.

   So the recovery may well be in place. But the question is, will it hold, or will it by dragged down by continuing stale performance in Europe?

   Taking a world view, consider this: If America leads, can Europe be far behind? That's based on an assumption, that America is destined to lead, and Europe is bound to follow.
   Not necessarily a valid assumption. In part, that assumption reflects arrogance among Americans and a willingness among Europeans to follow. The reality is that arrogance is found worldwide.
   Circumstance may dictate that, for now, the American economy is the largest in the world, but there is no guarantee it will stay that way. Other peoples have prospered in the past, and other nations have dominated -- if only briefly -- the world.

   Examples: Greece and Rome in ancient times, and others before that. Then Italy during the Renaissance and Spain in the 16th Century, followed by intense competition between England and France in the 18th and 19th centuries. In the 20th Century, that rivalry, complicated by the rise of a united Germany, led to two major wars that nearly destroyed them all. Meanwhile, Japan dominated the Far East.
   And all this mutual self-destruction left the U.S. as the dominant world power -- economic if not military -- as European and Asian countries exhausted their resources in war.
   But because their outdated infrastructures were decimated in war, nations had to rebuild, and in doing so updated and replaced their capabilities with new, more efficient equipment.
   In turn, this enabled them to compete more effectively with the purported winner, the nation that had been isolated -- separated from Europe and Asia by major oceans.
   Modern transportation and communication, however, have eliminated that security of isolation, and events that affect the European economy can easily infect the American.

   Meanwhile, whenever economic data reports are released, political types accentuate the positive and eliminate the negative. Many of them are like Willy Loman, the lead character in Arthur Miller's play, Death of a Salesman. The market is always great, and if any problems do show up, blame it on the other guy.