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Do you want to know why the economy has been so long in coming back? Look at the events. The market reached its peak in March 2000. I know I was there and saw it happen.
The market seems to have bottomed out in March of this year. In the interim, it lost about $10 trillion in value. That’s about equal to one year of Gross Domestic Product for the US.
Suppose you make $60,000 a year. Then you lose $60,000 out of your savings. You still have your job, but your net worth just took a $60,000 hit. After you stopped morning your loss, do you think you’d spend a little more cautiously?
Then 9/11 happened. Karol was at her Human Resources meeting tonight, and the speaker said that 9/11 cost this country $3 Trillion dollars.
Let’s go back to my personal analogy. You’re licking your wounds over the $60,000 hit, when you suffer another $18,000 loss. Now you’re down $78,000. Where you were cautious before, now you’re downright scared.
Multiply that across 250 million people and you can see why the economy has been so slow to come back. It takes a while to regrow all the fiscal and psychological skin.
Posted by Ted at February 19, 2004 10:06 PM