I was in New York through the horror of 9/11 and I well remember the sense of shock and “waiting for the other shoe to drop” in the days and weeks that followed. Although the whole nation and in fact most of the world reeled in sympathy, the gaping wound soon became a New York scar. That other shoe never really dropped. Instead things transmuted from fear and dread into a pervasive sense of anxiety and wars in Afghanistan and Iraq, punctuated by militant bombings in Bali, Madrid and London.
By comparison, the last few months have felt like a whole Imelda Marcos closet of shoes dropping day after day, and not just in the United States. It was pretty bad before September 15 (remember Bear Stearns and the subprime crisis?) but then Lehman and AIG and the rest of the last quarter of 2008 put a new spin on the notion of the fall season. Retail sales, production, jobs, bailouts, debt, Detroit, the economy, stock markets, international trade—everything seemed to be in free fall. For millions of people all over the world, the economic crisis has created a gnawing feeling of permanent anxiety, as if the world is falling apart.
Yet over the last few weeks that sense of falling has abated. To be sure jobs are still being lost, houses are still being repossessed, businesses are still struggling to make sales and the levels of debt and bailout defy the imagination. But stock markets are looking chipper, continuing a gradual rise that’s been going on for two months now. The price of oil is rising; the pace of job losses is falling. “Only” 10 of the 19 largest U.S. banks failed the new stress tests,, which means they’ll “only” need $75 billion of extra funds to bolster their reserves.
After months of unremitting bad news, some brighter reports have peeked through the gloom; 4.8 million American workers left their jobs (voluntarily or otherwise) in February but a surprisingly robust 4.3 million were hired; housing markets in hard-hit places such as California, Nevada and Florida are seeing buyers stepping in to buy foreclosed properties.
It would certainly be great if the worst of the crisis were over now and people could stop worrying about their jobs and their health care and education. However, it would also be a great shame if we all got too cocky too quickly and missed the opportunity to make the sort of “reboot” changes that seemed so urgent back in the Great Fall of 2008. And anyway, what we’re actually seeing is not so much an upturn as a slowdown in the downturn: Things are getting less worse than they were. Too much optimism might be as damaging as too much gloom.