Journalists, economists, and pundits of all sorts have turned to cautious optimism. Sure, stocks are up from their lows earlier this year, and the numbers out there indicate we're past the recession's trough and on our way up. As just one example, the Institute for Supply Management's bellwether monthly report on manufacturing indicated that the organization"s New Orders Index rose in May for the first time since November 2007.
Last week The Economist even put together an 18-page report on why America may emerge from the slump better than other economies, despite our broken health care system and other faults. In fact, some of the greatest firms were born during economic doldrums, including Microsoft and Apple. Downturns in America, the article said, lead to healthy, though brutal, creative destruction. Weak firms have no choice but to lay off talent, who in turn are snapped up by stronger firms. If those firms can continue to sell products during bad times, when consumers are choosy, they will only grow stronger during booms.
Great—so everything's cool, right? Well, not so fast.