WHAT IF 9-11 IS A COMPLETE ABERRATION, UNCONNECTED TO ANYTHING BEFORE OR AFTER?:

State Of Fear (Elizabeth MacDonald, 10.31.05, Forbes)

Seems like there's plenty to keep a panicky stock market stuck in a frozen solid trading range of 10,000 to 10,500 for another five years.

Rampant fears over oil prices. The ongoing Middle East mess and the war in Iraq. Fears that incoming U.S. Federal Reserve Chairman Ben Bernanke will excitedly hike interest rates too high to show he's a gung-ho, anti-inflation Rambo. Anxieties that hurricanes have jacked up already high gas prices, exacerbating the troubles of a middle class bogged down by mounting costs for education, housing and health care. White House indictments. Possible tax hikes, if the Democrats regain control of Congress in 2006. [...]

[D]avid Malpass, chief economist at Bear Stearns (nyse: BSC - news - people ), says stop with the hand wringing, this rocket of a U.S. economy won't fall into a recession next year, instead, it will see solid gross domestic product growth in the 3.8% to 4.2% range.

He cites low unemployment, his belief that household and corporate sectors are well insulated from Fed rate hikes, and the fact that the Fed is powerful in combating inflation, which he says is caused not by economic growth and not so much by energy prices, but by monetary accommodation and dollar weakness in 2003 and 2004. He also has reams of data showing the economy was strong going into Katrina, Rita and any other hurricane bound to barrel through.

It's understandable that folks would be kind of jumpy in a world in which it seems like you could be blown up any second for no apparent reason, but you could hardly ask for a bettter economy, especially with gasoline prices falling as fast as they are. The problem has seemed to be for several years now that no bit of news can be as spectacularly good as 9-11 was spectacularly awful, so people are still waiting for the other shoe to drop rather than enjoying a social climate that nearly every people in history, including our own, would envy.

MORE:
Consumer Spending Rebounds, Incomes Grow (JEANNINE AVERSA, 10/31/05 AP)

Consumers got back into a buying groove and boosted their spending by a solid 0.5 percent in September. Incomes also grew briskly.

The latest figures, released Monday by the Commerce Department, suggested that the economy is holding up well to the double blows of Hurricanes Katrina and Rita.

The 0.5 percent rise in consumer spending in September came after spending fell by that amount in August, reflecting the hit from Katrina.

Americans' incomes, meanwhile, increased by 1.7 percent in September, the largest gain since December 2004.

Housing Boom Fading, Leading Real Estate Economist Says (Steve Brown, 10/31/05, The Dallas Morning News)

A combination of higher interest rates and years of rising prices could soon take some air out of the hot U.S. housing market.

"The boom is showing some signs of tiring," David Lereah, chief economist with the National Association of Realtors, said Friday. "We are looking at about a 4 percent drop in home sales next year.

"We are projecting a significant drop in the price appreciation pace," Lereah said.

But even though the velocity of the housing market will subside, "we are looking for a soft landing," he told real estate agents from across the country who are meeting in San Francisco.

Posted by Orrin Judd at October 31, 2005 1:29 PM