John McCain was right when he said Monday that despite the bad news about Lehman Brothers filing for bankruptcy and AIG trolling for help from Uncle Sam, "the fundamentals of our economy are strong." As politicians running for the White House learn, honesty is a commodity best used sparingly on the campaign trail. Voters apparently believe that America is in a terrible recession -- even though the gross domestic product grew at an annual rate of 3.3 percent last quarter and grew by some .09 percent in 2008's first quarter. When the public is in full panic mode, McCain could take a lesson from Barack Obama, who is running ahead of the stampede.

On the campaign trail Wednesday, Obama bemoaned "the most serious financial crisis in generations." He said the exact same words the day before. You can tell it's the most serious financial crisis in generations because the unemployment rate is 6.1 percent -- which, The Chronicle reports, represents a "five-year high." When the unemployment rate was 5.7 percent in July, that was a "four-year high." The Associated Press reports that the number of troubled banks is also at a "five-year high." Five-year highs? These are the statistics that herald the worst financial crisis since the Great Depression?

Remember last month when oil, having hit the price of $145 per barrel, was the issue on which the election would hinge? Forget it. Oil is now selling at below $100 per barrel, but that bit of good news is buried in the deluge of doom-and-gloom reports.

"The most serious financial crisis in generations?"

Donald Luskin, a chief investment officer with the Menlo Park investment research firm TrendMacrolytics and an economic adviser to McCain -- who tells me he has never talked to McCain -- remarked that if Obama "had a little bit more experience," he would "put these things in more context." Luskin has lived through five or six recessions, and "this ain't one."

It isn't a recession because the U.S. economy has grown in both of the last two quarters. Read: It is not receding.

And while Luskin sees the unemployment rate as "a little high," it is "not as high as it typically is in a recession." Yes, Luskin is concerned about inflation, now at 5.4 percent. The drop in oil prices may help. Continued...