America’s economy: Looking better

Posted: January 23, 2013 in economy
Tags: , ,

WHEN Barack Obama was sworn in four years ago, the economic figures were terrifying. A financial crisis and a savage recession were in full swing, and house foreclosures were soaring. The day of his inauguration, panic about the banks sent the Dow Jones Industrial Average down more than 300 points. At the start of his second term, by contrast, the Dow hit a five-year high, while a widely followed index of investor fear called the VIX reached a near-six-year low (see table).The change in mood is understandable. The financial crisis and recession ended more than three years ago. The housing market is firmly on the mend. Employment is growing. The euro zone, though feeble, is no longer about to collapse. And the threat of home-grown crisis appeared to recede when Republicans in the House forbore to use the threat of default to extract spending cuts. On January 18th they said they would raise the Treasury’s statutory ceiling until May 18th; previously, the Treasury had expected to run out of borrowing authority as early as mid-February.On average, the economy performs less well in a president’s second term than in his first (see chart). That pattern probably does not apply to Mr Obama. Since his first term was so difficult, the next, by rights, ought to be better.What could spoil matters? Some of the risks are illustrated by the experience of Franklin Delano …

via Economic Crisis http://www.economist.com/blogs/freeexchange/2013/01/americas-economy-0?fsrc=rss

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