The economy is growing again. Where does that leave you?

Happy? Or scared?

Today’s big economic news is a report showing the US Gross Domestic Product grew 3.5 percent from July through September, the first GDP growth in over a year. Wall Street was happy.  Stocks on the Dow Jones average rose nearly 200 points. The Obama Administration’s $787 billion stimulus program, combining tax cuts and government spending got some of the credit.  At the same time, another report this week showed that American consumer confidence is down, partly due to unemployment continuing to climb. It’s almost at 10 percent now, while wages are mostly flat and home prices remain low, 401Ks are not recovered, blah, blah, blah…

If you’ve looked at a newspaper, or TV screen, or the Internet in the past 18 months, you’ve seen all the dismal stats.

So now that the GDP is growing again, which way are things going for you?  Not in the next six months, but in the next six years. What kind of economy is going to emerge from the greatest economic decline since the 1930s?  That’s the big question, and it points out one of the big dilemmas of journalism.   You would think that the really important stuff would be stuff that you would want to pay closest attention to but the important stuff — the average American’s position in the economy — often builds over a lot of time, sometimes over many years, in the way that you’re supposed to boil a lobster, starting with the water at room temperature, so that by the time he or she is cooked, he or she doesn’t notice (so they say).  So although this present recession seemed to start abruptly, the factors behind it kind of crept up on us.  And that’s what’s tough to cover, and tough to follow.

As I've said before, at Vanguard we try to look forward. In May, we did a documentary mini-series in which we tried to look at the economy that we’ve had in the US since the 1980s, against the backdrop of its collapse.  Laura Ling went to Las Vegas, formerly the fastest growing place in the US, for "Lost Vegas."



Adam Yamaguchi went to China’s manufacturing center for "Outsourcing Unemployment."



And Lauren Cerre and Tracey Chang went to Argentina for "Thank You, Recession."



Basically, we were looking at what kind of economy will emerge from this present downturn.  Will we manage to go back to the system we’ve had since the 1980s?  There we had tremendously high levels of consumer spending on cheap stuff — cheap because we’ve outsourced many of our manufacturing jobs to places where wages are lower.  And our wealth creation came from real estate, stock, and equity inflation — essentially a series of bubbles.  Or we could go back to the system we had in the ‘50s through the ‘70s, where there wasn’t so much economic separation in the US — we were essentially middle class — and wage growth was the key to economic improvement.

As we travel around the world, there is also another model that we see in globalized economies: Those economic engines of the developing world, like China and India, where the “developed” portion of the economy, the economy that we see and which looks like ours, doesn’t include all the population, or even most of it.   Many, or most citizens, in these countries are invisible in economic terms.  In fact, when Tracey Chang interviewed the COO of Infosys, the poster child of India’s high-tech development, in Bangalore India, he pointed out to her that India’s growth was not including most people.



So where are you going to emerge?  Right now there seem to be three directions.