I’m a huge fan of Paul Krugman and his blog posts and op-ed pieces for the New York Times are required reading for me everyday. And more often than not, he seems to hit the nail on the head in terms of why we should be cautious about the economy.
I’m detecting a trend in commentary that I find slightly ominous. Some of the economic news lately has been slightly better than expected, which was bound to happen at some point (on average, after all, half the news should be better than expected). Mostly this is in the form of things getting worse more slowly, but it wouldn’t be surprising if we see, say, an uptick in industrial production in a few months, as the inventory cycle runs its course.
If so, that doesn’t mean the worst is over. There was a pause in the plunge in early 1931, and many people started to breathe easier. They were wrong.
So far, there’s nothing pointing to a fundamental turnaround this year, or next, or for that matter as far as the eye can see.