We keep seeing the traditional economic indicators looking better. Today it was durable goods, which tracks purchases of long-lasting products (for example, refrigerators, cell phones, airplanes). Durable good purchases are a sign that businesses are getting ready to grow. Those orders were up three percent in December, beating analysts expectations. And that's following on a rise of 4.3 percent in November.
We're seeing other economic "green shoots" as well, including falling unemployment, rising consumer sentiment and increases in manufacturing. Some would say you have all the makings of a country on a path to recovery.
Business leaders like Jamie Dimon, CEO of JP Morgan Chase, are convinced that, yes, the recovery is real. But Federal Reserve Chairman Ben Bernake and the 17-member Federal Reserve Committee say it will take years before the economy is healthy again. To help it along, the Fed will use the tools in their kit to keep things stable.
We talked with Doug Roberts at Channel Capital Research about how he distinguishes the truth from the hype. Roberts says our economy has grown very dependent on monetary stimulus in the past decade and a half. He says this stimulus is more like a narcotic that has stabilized the patient than real medicine to cure it.
Roberts says the Fed is essentially saying to the government, "I'll stabilize the markets for you, but it's not [my] job to fix the economy." To fix those fundaments in the long run, it's essential for government and businesses to do more.