Yesterday on CNBC, co-anchor Dennis Kneale, late of Forbes, presented the very defensible and, in my opinion, correct view that the seemingly-widespread handwringing about the current US economic situation is overdone.
As Kneale noted, 1980 was far, far worse than 2008.
Back then, the price of a barrel of oil was roughly $107, versus $130 now, a rise of slightly less than 30%. But consider the following other measures.
The average fuel efficiency of a car was 25mpg in 1980, versus 32mpg now. Even with so many SUVs on the road. That's a rise of roughly 23%.
What about non-transportation usage of oil for power generation? Six years after the initial 1974 oil embargo, the US generated only 10% of electricity generated from oil. Now, it's down to only 1.6%! More than an 80% decline.
The inflation outlook is similarly different now from then. Back in 1980, a typical monthly CPI change was 1%, in contrast to today's modest .2%. Again, an 80% decline!
Lastly, interest rates are at totally different levels. In the Carter era, rates were north of 10%, whereas now they are far lower, with Treasuries at 4% this morning.
Yes, the Carter era was incomparably worse than today's Bush economy.
The US is nowhere near the levels of misery index and widespread despair that led to Carter's mistaken steps such as: windfall oil profit tax, gasoline rationing, and lectures to Americans on reducing credit usage and wearing more sweaters.
Certainly, with a Presidential election season gearing up, we'll be hearing a lot from at least one candidate about how the US is on the brink of depression, failure, catastrophe, etc.
Don't you believe it.
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