WASHINGTON -- As gloomy as our economy seems now, we still have plenty of reasons in this season of hope and goodwill to be grateful and even optimistic about the future.
We live in a blessed land where we are free to voice our grievances about policies and people that displease us and exert the ultimate power over governments by replacing unpopular administrations, lawmakers and all those who govern beneath them by simply checking a box on a paper ballot or a computer screen.
We live in a country where people of all walks of life are free to climb the ladder of opportunity and pursue their dreams, even against daunting challenges and heavy odds. Despite all the problems that confront us from time to time, depressions or recessions, we have always overcome them and made this a better and freer place to live and prosper.
To be sure, over the past year, America's spirit of optimism has dimmed somewhat as our economy has descended into a recession that has hurt a lot of people and their communities. Our confidence has waned in the process, and there are those who say our country will never be the same -- that we are consigned to slower growth, fewer opportunities for the next generation and maybe a more dysfunctional society.
I don't believe that for a moment, and I'm happy to see that President-elect Barack Obama -- even as he characterizes the enormous economic and social problems that lie before us -- expresses his optimism that things will get better, the economy will turn around, and lives will be improved.
Early in his primary campaign, Obama said he admired Ronald Reagan for lifting the hopes of a dispirited and pessimistic nation at a dark time in our country's history. Some in his party criticized him for believing there was anything good to say about Reagan. But since his election, he has sounded a bit like him, expressing a sunny optimism that has boosted the nation's confidence in his forthcoming presidency -- as several polls now show.
Whether Obama's big-spending public-works proposals will turn the economy around remains to be seen, but make no mistake, one way or another, it will eventually recover. All recessions end, and this one will, too.
But Obama may have been playing the expectations game when he said that things will get worse before they get better. "It will take longer than any of us will like; years, not months, but it will get better if we are willing to act boldly and swiftly."
Things will no doubt get worse in the short-term, but there are glimmers of hope here and there that the economy may in fact be on the precipice of turning around sooner than later.
This recession had its roots in the subprime-housing bubble that burst, bringing down a major sector of our economy and the financial markets with it. But several changes have occurred on that front that bode well for the future of the housing industry.
Mortgage rates have fallen to a little more than 5 percent on average in the past couple of weeks, and it's likely they will fall further in response to the Federal Reserve's latest interest-rate cuts and other initiatives it is taking to bring down fixed 30-year rates to about 4.5 percent.
Combine this with falling prices for new and existing homes, and you have the makings of a sharp upswing in home buying and a recovery in the real-estate markets. There's already been a sharp rise in mortgage applications and in refinancing as a result lower rates. I expect them to fall even further in the weeks to come.
Add to this a slow but gradual opening in the lending markets for creditworthy applicants. Despite the perception that Treasury Secretary Henry Paulson's injection of nearly $350 billion into the financial markets has not effectively unclogged the nation's credit arteries, there is growing evidence in the banking sector that loans have begun flowing again to borrowers.
So much of our recovery depends on global economies, and here, too, there is a lot going on. Central banks from Europe to Asia, have been pumping trillions of dollars into their financial institutions in a coordinated and unprecedented attempt to jump-start recessionary economies on a worldwide scale. In other words, governments both here and abroad are injecting plenty of liquidity into the world's vast, interconnected economic bloodstream that will be a huge factor in the global economy's recovery and our own.
Obama's prediction of "years, not months" not withstanding, the history of recent recessions shows they do not last long. The 1974-1975 recession lasted 16 months; in 1980, it lasted six months; the 1981-1982 downturn ran for 16 months; the 1990-1991 decline ended in eight months, as did the 2001 recession.
So don't believe the gloom-and-doomers who are always selling our country short and who are always wrong over the long run. We've got a bumpy road ahead of us in the next few months, but we're going to pull out of this downturn a lot sooner than the pessimists think.
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