Sorry, Chicken Little,, Gene Epstein

THESE ARE HARDLY THE BEST OF TIMES FOR THE U.S. ECONOMY. But they may not be as bad as you think. The credit crisis, stock-market crash and fall in home prices have raised legitimate fears of a nasty and protracted recession. Yet the economy has often proved more resilient than is commonly thought -- and constructive factors that have gotten scant attention should help the U.S. skirt a deep recession. In fact, it's possible that the downturn could prove to be one of the briefest and mildest on record.

The main positive is the huge boost to consumer spending that will come from the decline in energy costs. Although the run-up in oil, which punished consumers in the spring and summer, made front-page news, far less attention has been paid to the benefits of petroleum's recent slide.

The wide swing in both the percentage and sheer dollar magnitude of prices has been unprecedented. Over the past 14 months, the bellwether price of crude oil has made a stunning round trip, rising from around $70 a barrel in mid-August 2007 to $147 by mid-July, and falling below $70 Thursday. Natural gas has also slid about 50% from its early-July peak. If oil's price averages around $80, consumers will get a big dose of relief. Soaring energy costs had body-slammed them in July, August and September. Hence the dismal performance of retail sales over that stretch. But beginning with the current month, the energy payback will be enormous. This economic shock absorber should help offset the cruel blows of the credit crunch and declining wealth from equities and homes.

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The Economy Is Just Fine..., Barry Ritholtz, Big Picture

Nothing to see here, move along, everything's fine.

That's what Gene Epstein, Barron's Economic Beat columnist, and author of the book Econospinning: How to Read Between the Lines When the Media Manipulate the Numbers, is saying in this week's magazine.

I was unsure as to where to begin in taking apart his column -- its not that it is so densely packed with errors (that's a given). Its that the author's worldview is, well, from a different world than ours.

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Where does one begin to fisk this? The Cavalry hasn't swept in? You mean to say that nationalizing the finance sector of the US, guaranteeing $2 trillion dollars in lending an deposits, and cutting rates to 1.5% rates -- thats not the cavalry?

And most economists understand why Oil is down -- its called demand destruction. People stopped consuming it, because they cannot afford to. A global recession is deflating all manner of commodities. This is a bad thing, not a good thing.

This is economic cheerleading way, way beyond the ordinary mindless spinning. Its an entirely different order of magnitude. This guy makes my boy Kudlow look like a depressive.

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