Rodney

I have my own ideas, but we'll all have a pretty good idea of how well the economy is really working in about a year, when interest rates (ever rising, apparently) have well and truly ended the real estate boom.

So, what might happen then?

* No more home equity loans to support a consumer lifestyle in the face of falling income
* Falling retail sales and employment
* Falling new- and -existing home sales and employment in real estate, construction, and home furnishings
* Diminished "wealth effect" from people whose homes are now worth less than they perceived them to be, and thus also reduce theirspending.
* Rising rent because of more demand for rental property, which is already happening in some areas.

An economy can look pretty active if you pump enough liquidity into it (ie, the Fed lets the banks loan freely at low rates, with minimal reserve, and there's foreign capital as well). But it's kind of like cocaine; gives you a lot of energy for a while, but leaves you in worse shape than when you started. Because we used all that money to buy and sell houses from each other, and buy stuff that's increasingly made overseas. Not to build more productive capacity here.

Instead, corporate profits are being used for stock buy-backs to run up stock prices, and to invest in "emerging markets" (Brazil, Russia, Indian, China -- the BRIC countries) where many of their new job openings are.

Yes, I've found it relatively easy to find work in this economy -- half time work with no benefits. It's not like any recovery I've seen before, and I've seen three, _plus_ stagflation.

Last couple of paragraphs aside: when we stop buying and building houses at a furious clip, much of our economic growth of the last few years may disappear. And a weaker US economy could also mean a weaker dollar, and thus even higher fuel costs to us, leading again to a weaker economy, and so on.

I could be wrong. But let's talk again next year.