Tags: uncertainty | Obama | Index | economic

The Economy Is Different This Time, Thanks to Obama

By    |   Wednesday, 05 Jun 2013 07:40 AM

Economists often stress that it is dangerous to believe "this time different." General economic trends usually follow historic patterns and ignoring those patterns leads to problems.

In the 1990s, for example, investors believed that this time was different. The price-to-earnings ratio no longer mattered in the new economy because the price-to-eyeballs ratio was a better way to measure the value of websites. We now know that nothing was really different then, and the crash that followed the mania destroyed hundreds of billions of dollars in wealth.

Over the past five years, the economy has been different than it has been in the past. The Economic Uncertainty Index has been about twice as high as average since 2008.

In the past, uncertainty has tended to spike higher on news events like the Gulf wars and 9/11 and then quickly return to normal levels.

The Index had an average value of 97 from 1985 until the financial crisis hit in 2008. Since then, the Index has averaged 161.

Uncertainty has now been greater than average for 56 consecutive months. The previous record was 19 months and ended in 1986.

What’s different this time is that President Obama refuses to negotiate with Congress. Economic certainty has always required Washington to function properly. Without compromise, budget and tax policies become a drain on the economy.

Until the country’s leaders start working together, uncertainty will remain high and the economy will struggle.

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MichaelCarr
Economists often stress that it is dangerous to believe "this time different." General economic trends usually follow historic patterns and ignoring those patterns leads to problems.
uncertainty,Obama,Index,economic
237
2013-40-05
Wednesday, 05 Jun 2013 07:40 AM
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