-- The Federal Reserve Board recently released its "flow of funds" data showing the breadth of the nation's household balance sheet in the fourth quarter. It showed household net worth rose to $55.6 trillion. Financial net worth increased to $28.8 trillion.
"Rather than 'running on empty,' it shows brimming U.S. liquid assets in both the household and corporate sectors. Household net worth in December was 7.4 percent higher than in December 2005, with financial net worth up 8.1 percent," he said.
-- The Fed estimated corporate profits rose to an annual rate of $1.67 trillion in the fourth quarter. That's up by nearly 20 percent over last year. Recessions happen when profits are plunging or at least stagnant. Quite the opposite is happening.
-- Fed data reported continued high levels of household and corporate liquidity. Notably, it showed that, at $28.8 trillion, U.S. households "have more net financial assets (savings) than the rest of the world combined." This "contradicts the negative savings-rate assumptions which underlie many of the recession outlooks," he noted.
-- The jobs picture remains strong -- 9.5 million new jobs created since 2001. Malpass thinks the jobless rate will fall below the current 4.5 percent, "helped by solid economic growth, especially among small businesses.
The gloomy numbers coming out of last month's economic activity data, showing a downturn in consumer purchases, were in large part to due the nasty winter weather that engulfed much of the nation. But that will turn around with the improved spring weather.
Measuring our economy's health on the basis of one month's numbers is a risky business. Consumers buy in cycles, which decline when they pause to pay their bills, before plunging into the stores again.
That is what's happening in the housing markets, too. After a record-breaking housing boom, the industry is in a period where it must reduce its overbuilt inventory before new housing starts later this year when interest rates may be a bit lower to lure homebuyers back into the market.
In short, the subprime-mortgage problems have caused some turbulence in the stock markets. But we'll get through this rough patch, as we always have before.