The Emperor's New Clothes--Insight into the "New Economy"

The media says that there are many current signs of economic progress, low inflation, more jobs being created, people spending, the DOW Jones moving to over 11,000.  At the same time nation-wide unemployment remains at about 9.7%. (This is an artificial figure because it represents people actually claiming unemployment benefits.  When people exhaust their benefits or, after a year or more of not finding jobs, apply for Social Security or take a lower-paying job, they drop off the rolls of the unemployed.)

Recently I have encountered many people hired to work on the Census 2010.  Almost all of them are looking (and have been looking) for work and have been unable to find it.  It is good that the census gives them a temporary ("intermittent") job--similar to a substitute teacher, working when there is work to be done.

Hans Christian Andersen created a story about The Emperor's New Clothes.  A child looked at the emperor and said, ". . . but he isn't wearing anything."  The "new economy" (and economics in general and the current economic recovery in particular) is a lot like "the emperor's new clothes."  There is a lot of trust involved and everyone needs to see and believe in the same way for it to continue to operate.

There are a lot of reality checks that act like the child.  The FDIC is anticipating more bank failures this year.  Homes are still being foreclosed.  Many people are looking for work to replace incomes they used to have when, for whatever reason, they were laid off.  States are hurting for income because people haven't made enough money to pay what they used to pay in taxes.

Is this a pessimistic post?  I believe in seeing the glass "half full" rather than "half empty."  At the same time, if the glass is half full, it's important not to claim that the glass (or gas tank) entirely full and to expect to "go the distance" a full glass (or gas tank) would allow.