The United States has a confidence problem: a nation long defined by irrational exuberance has turned gloomy about tomorrow. Consumers are holding back, businesses are suffering and the economy is barely growing.
There are good reasons for gloom - incomes have declined, many people cannot find jobs, few trust the government to make things better - but as Federal Reserve chairman, Ben S. Bernanke, noted earlier this year, those problems are not sufficient to explain the depth of the funk.
That has led a growing number of economists to argue that the collapse of housing prices, a defining feature of this downturn, is also a critical and underappreciated impediment to recovery. Americans have lost a vast amount of wealth, and they have lost faith in housing as an investment. They lack money, and they lack the confidence that they will have more money tomorrow.
...The latest data from the survey, released Friday by Thomson Reuters, shows that expectations for economic growth have fallen to the lowest level since May 1980.
In Orlando, a city that trades in upbeat fantasies, the housing crash has been particularly painful. The total value of area homes has fallen below the total mortgage debt on those homes, according to the real estate analytics firm CoreLogic. In the parlance of the real estate world, Orlando is underwater, a distinction matched by Las Vegas.
------- FREE Newsletter ------- Straight from the Hip - A Weekly E-Letter
"This weekly stock market column written by me has run for over 19 years on various platforms. I invite you to subscribe today for a fresh and thought-provoking perspective." - J Mulraj
Available exclusively to readers of Equitymaster. Sign-up Now! It's Free!
*** Meanwhile, the Zombie Metropolis, is doing fine. Here, we turn to Bloomberg:
Federal employees whose compensation averages more than $126,000 and the nation's greatest concentration of lawyers helped Washington edge out San Jose as the wealthiest U.S. metropolitan area, government data show.
The U.S. capital has swapped top spots with Silicon Valley, according to recent Census Bureau figures, with the typical household in the Washington metro area earning $84,523 last year. The national median income for 2010 was $50,046.
The figures demonstrate how the nation's political and financial classes are prospering as the economy struggles with unemployment above 9 percent and thousands of Americans protest in the streets against income disparity, said Kevin Zeese, director of Prosperity Agenda, a Baltimore-based advocacy group trying to narrow the divide between rich and poor.
"There's a gap that's isolating Washington from the reality of the rest of the country," Zeese said. "They just get more and more out of touch."
Total compensation for federal workers, including health care and other benefits, last year averaged $126,369, compared with $122,697 in 2009, according to Bloomberg News calculations of Commerce Department data. There were 170,467 federal employees in the District of Columbia as of June. The Washington area includes the District of Columbia, parts of Northern Virginia, eastern Maryland and eastern West Virginia.
In recent years Washington has attracted more lobbyists and firms with an interest in the health-care overhaul and financial regulations signed into law by President Barack Obama, according to local business leaders.
"Wall Street has moved to K Street," said Barbara Lang, president and chief executive officer of the DC Chamber of Commerce, referring to the Washington street that's home to prominent lobbying firms. "Those two industries clearly have grown in our city."
Last year Washington also had the most lawyers per capita in the U.S. compared with the 50 states, with one for every 12 city residents, according to figures from the American Bar Association and the Census Bureau. In New York State the figure was one out of every 123 residents, while in California the ratio was one in 243.
*** "God did not create this country to be a nation of followers," announced Mitt Romney in his speech at the Citadel. "America must lead the world."
We can read the old and new testaments. We can consult the priests and soothsayers. We can dissect dead animals and walk the road to Damascus. But damned if we can figure out why God created the USA. We are so fortunate to have Mitt Romney; he seems to have God in his pocket.
Without "clarity of American purpose and resolve, the world becomes a far more dangerous place," says Romney. What purpose? Resolve to do what? To have "the strongest military in the world."
Really? Did the God of Abraham, Isaac, Sarah, Jesus of Nazareth, of all the saints, archangels and seraphim really whisper in the ear of the former Wall Street hustler? Did He reveal His plans to this Mormon mouthpiece? Did God - father of the Prince of Peace - really tell Mitt Romney that he should go forth and kick butt all over the planet? It seems unlikely. But who knows? Maybe Romney is right and God is a moron. Or maybe He is just having some fun with Mitt Romney.
"This is America's moment," Romney insisted. Anyone who doubts that the US imperial role - though it will bankrupt the nation - is God's will, should "crawl into an isolationist shell" he said, and "wave the white flag of surrender."
We don't know what to think. But God has His ways. His plans. His purposes. It is not for us, at least those of us here at the Daily Reckoning, to know what He has in mind. All we have is questions:
Has God spoken to Mitt Romney? If so, is Romney His candidate? Or his fool?
Bill Bonner is the President & Founder of Agora Inc, an international publisher of financial and special interest books and newsletters.