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Confidence Returns to US Economy? Perhaps…

Earlier this month, the U.S. unemployment rate dropped to 7.8 percent—still high but under eight percent for the first time in four years. Now another indicator is moving upward. The FT reports that wholesale inventories and sales rose in August by 0.5 percent and 0.9 percent, respectively—higher upticks than most analysts predicted. This is a promising sign: Stores increase inventory when they are confident that sales will increase in future months.

There are good reasons to believe that America will weather the global crisis better than most other countries. But if the rest of the world enters another recession, as the IMF believes it might, and if central bankers lose their grasp on the economy, then all bets are off.

We all like to think that economics is an established science and that the right doctors can cure whatever has gone wrong. Reality is harder; the world economy like the historical process itself cannot be fully predicted or understood — much less controlled.

Anxiety, doubt, confusion and worry: these are part of the human condition. The last few years of economic turbulence should at least have taught us that the mandarins and technocrats, despite their impressive CVs and their mastery of the jargon, don’t have all the answers we need.

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