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Bronze linings

The economic news may be terrible-but it's not uniformly bad

Justin Sullivan/Getty Images • inset photos by Associated Press

Bronze linings
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A slew of sometimes-record bad economic reports emerged as 2008 wound down last week. But if you look hard enough, not all of the financial news is bad, and some good news may keep the economy from worsening next year.

The bad news made big headlines:

• The Standard & Poor's/Case-Shiller housing index dropped by 18 percent in October, the latest month with reported data. It was the largest drop since the creation of the 20-city index in 2000. "The [housing] numbers are getting worse," economist Patrick Newport told the Associated Press. "And I think they will get quite a bit worse over the next two months because housing demand has plunged since the market went into turmoil."

• The Conference Board reported that the Consumer Confidence Index in December was at its lowest level in the index's 41 years of existence. The index fell from 44.7 to 38.

• The Institute for Supply Management reported a third straight monthly contraction in business activity for the month of December. The Commerce Department reported that the gross domestic product was set to shrink at a 0.5 percent annual pace in the last quarter of the year.

• November's unemployment rate was 6.7 percent, the highest in 15 years.

But the economy has also been making history in positive ways. The most noticeable, because large signs throughout every city declare it, is the rapid decline of gasoline prices. The average U.S. price of a gallon of gas fell from about $4 per gallon in July to about $1.65 per gallon last week.

This is saving American drivers and businesses hundreds of billions of dollars. Economists such as Larry Kudlow argue lower gas prices will help the economy much more than the spending-and-debt heavy stimulus package that Congress and President-elect Obama are fashioning.

Early last week, even as tensions mounted in the Middle East and as Saudi Arabia announced a production cut, oil prices remained below $40 per barrel. This led many analysts to predict low prices at the pump well into the new year.

The good energy news isn't limited to gasoline. Some analysts expect the price of home heating oil in the Northeast this winter to be down almost 25 percent from last year. (Users of natural gas likely will see a far smaller decline.) Energy analyst Sarah Emerson, in the Christian Science Monitor, called falling energy prices "a giant tax cut" and "one of the best things to happen to the economy over the next six months."

Recent weeks have also produced some good news for homeowners who did not get in over their heads during the subprime mortgage debacle. Mortgage rates have plunged to their lowest levels in decades, leading to a boom in refinancing.

The Mortgage Bankers Association reported that mortgage applications jumped 48 percent for the week ending Dec. 19, with a 63 percent jump in refinancing leading the way. Only 0.8 percent of applications were for the adjustable-rate mortgages that were hugely popular just a few years ago. Most borrowers instead used fixed-rate mortgages to lock in lower payments.

The bad news on the economy is still bad, and the country likely will continue to struggle as it works through the mistakes of the last few years. But these clouds are not without at least bronze linings.

Timothy Lamer

Tim is executive editor of WORLD Commentary. He previously worked for the Media Research Center in Alexandria, Va. His work has also appeared in The Wall Street Journal, The Washington Post, and The Weekly Standard.


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