Economic Optimism Down – 17 Month Low – Why?

SPECIAL BLOG POSTING

Investor’s Business Daily reported this week that economic optimism is down to a 17 month low, according to the IBD/TIPP Economic Optimism Index.  Separately, small business confidence is also declining with a lower sales outlook, according to the National Federation of Independent Business.  Why has economic optimism declined?  Are these results unexpected?  Let’s talk about this now.

The primary reason for the decline in economic optimism is the lack of jobs for those who are seeking work.  According to the IBD article, Raghaven Mayur, president of TIPP, a unit of TechnoMetrica Market Intelligence, believes the official unemployment rate of 9.5% “grossly underestimates” the jobs problem.  He thinks the true jobless rate might be as high as 22-25%.

These results are not unexpected if you follow the economy closely.  I think a double-dip recession continues to be a very real prospect, unless we change fiscal tax and spending policies.  2011 might see the next dip with the repeal of the Bush tax cuts.

Citizen Economics Blog – News, Analysis, Insight, Practical Knowledge by Gerard Francis Lameiro, Ph.D.