3 Overblown Myths of Economic Doom

NEW YORK (MainStreet) -- While the global economic climate is hardly a sunny one, it’s not as dark, dank and dismal as the mass media would have us believe. To make this point, a Philadelphia money manager pumps up three big economic myths the media pushes, then shoots them down.

Certainly, nobody’s throwing a parade over the latest economic data. The unemployment rate rose to 9.2% in June, as the economy generated a paltry 18,000 jobs. That number wouldn’t fill half of Fenway Park.

Also, consumer confidence is at a two-year low, according to the Thomson Reuters/University of Michigan consumer sentiment index. Manufacturing data and retail sales are also in a tailspin.

True, it’s not exactly the summer of recovery, but nobody is talking about Americans having to churn their own butter – at least not yet.

That’s where Bob Turner, chairman and chief investment officer at Philadelphia-based Turner Investments, falls on the economic fault line. In a July 11 letter to clients, Turner wasn’t above throwing some cold water on economic doomsayers (or as Turner calls them, “Chicken Littles”) who are running around with the economic equivalent of their hair on fire.

Citing Matt Ridley’s book The Rational Optimist, Turner makes his case for why fears of an economic doomsday are overblown. Specifically, he cites several “myths” that the Chicken Littles turn to time and again when wailing about the economy.

Sluggish economic growth. We didn’t get into this mess overnight, and we won’t get out of it right away either, Turner says. “The financial crisis triggered the worst recession in modern times and bigger government deficits around the world,” he says. “Realistically, recovering from such a mighty economic shock won’t happen – and in fact isn’t happening – overnight.”

While that “overnight” window has long passed, Turner expects that recovery is not too far off, despite the warnings of years of hardship ahead.

“We think the recent weakness should prove only temporary, that the U.S. economy may perk up over the next six to 12 months, powered by improved consumer spending and continued robust corporate capital spending,” he says.