For quite some time, the US has been facing myriad challenges associated with a falling economy. Indeed, since December 2007, the difficulties have been of such sufficient proportions that the National Bureau of Economic Research has deemed the US to be in a recession. Subsequent statistics have shown it to be the worst period for the economy in many decades.
Toward the end of the first year of this debacle, I wrote a column in which I quoted former British Prime Minister Winston Churchill’s famous words of 1942 when he was discussing a British victory after numerous crushing defeats at the hands of Nazi Germany. He recognized that there were many tremendous challenges ahead if the Allies were to be successful in their goal of defeating Hitler, but he also realized that the momentum had shifted, hope had been restored, and that a new day was approaching. Through the dark clouds of despair and suffering, he saw the times ahead in a different light. To him it was the “end of the beginning” of the bitter struggle. From that time forward, his nation’s march would be forward and positive. I saw a similar point in the economic malaise as credit markets finally showed signs of thawing.
It is now appropriate to move a step closer to recovery and declare that we have reached the “beginning of the end.” The direction leading toward economic recovery has been defined, and the initial signs along our odyssey are proving to be positive ones.
Does that mean we will no longer see any surprises or that our economic problems will suddenly diminish significantly? Far from it. Just as Churchill believed it would take time to achieve the allies’ goals for successfully concluding the war, we must realize that the recovery of our economy will not be accomplished immediately or even in a few months. Even so, the path is becoming clearer as we see the emergence of the colors that have been painted in broad strokes on the nation’s economic canvas.
While the full impact of the various government plans put forth over the past several months to cure our economic ills is not yet wholly evident, we can be assured that the momentum is changing. The worst is not over yet, of course, but there has been a substantial decrease in the pace of the bad news. Moreover, the spread between LIBOR and US Treasury rates, the single most important barometer of progress, has noticeably narrowed. Problems are being solved, loopholes in practices are being closed, and credit is once again beginning to flow in a reasonable manner.
Headlines still plague us with unemployment data and foreclosure notices. Retraining for future opportunities is still being required and the uncertain fluctuation of oil prices and the equity markets continue. Still, the innovative spirit that spawns new ideas and technologies and brings them to the marketplace remains alive and healthy. Furthermore, the level of human ingenuity is moving perpetually upward.
As Churchill suggested in his famous comment in which he perceived that the momentum had shifted and a new day was ahead, we can have faith that we are now at the “beginning of the end” with the anticipation that while it will still be a bumpy ride for some time and hardships will occur, the end is coming into view and we can be confident that we are headed in the right direction. Unfortunately, this phenomenon is most commonly manifested in things getting worse at a slower pace, but even that is progress. As a result, we have every reason to be encouraged.