Two years ago the U.S. economy was in the depths of one of the worst recessions in my lifetime. Financial markets were priced to the expectation that the economy was headed into a deep depression that would be far worse than anything ever seen before. At one point, corporate credit spreads and equities were priced to the belief that as many as half the companies in the U.S. would be bankrupt within 5 years or so. There were lots of forecasts of unemployment reaching as high as 25%. The bond market expected to see years of outright deflation. Financial markets all over the world we gripped by panic, and many thought we were on the verge of a global financial collapse. I hope I never have to live through anything like that again.
Yet here we are, two years later, and the economy is growing and deflation is a no-show. Corporate profits are at record levels, and consumers are getting back on their feet. The unemployment rate is still at a very painful 9.5%, but there are signs that job creation is going to be slowly ramping up. The political winds have come full circle, and fiscal policy looks set to favor the growth of the private sector, rather than the public sector. Financial markets have not yet made a full recovery, but there has been tremendous progress.
I'm hopeful we'll see continued progress on all fronts, and I'm encouraged by my unshakable belief in the dynamism of the U.S. economy, the power of free markets, the entrepreneurial spirit which has created so many jobs and brought us such widespread prosperity, and the willingness of just about everyone to work hard so that we can give our children a better life. I'm excited to be a part of the internet age, since it enables the dissemination of good ideas at the speed of light, and because I believe that good ideas will always triumph over bad ideas.
Finally, I'm thankful to my many readers and to all those who have contributed so many constructive comments and questions.
May everyone have an enjoyable Thanksgiving. If only everyone could also enjoy the spectacular weather we're having here in So. California!