Any Other Business | 13 November 2010

Disappointed, discouraged – but American optimism will soon start to return

Philadelphia

‘We should always love America, not for its leaders — who generally turn out as disappointing as our own — but for its vitality, its collective belief in the possibility of renewal.’ That’s what I wrote from Los Angeles, exactly two years ago, having flown into the blissed-out Californian version of post-election Obama-mania, which all too briefly vanquished the clouds of financial crisis. Crossing the pond again, this time to Atlanta and Philadelphia, I find the clouds have closed in and the economic mood is, by American standards, strikingly downbeat.

Even a good-news item that forecasters had feared would be bad — 151,000 new jobs created in October — is marred by shadows. The headline number represents one new job for every hundred unemployed, and that doesn’t take account of 1.2 million people who are officially ‘discouraged’, meaning they’ve stopped looking for work because they don’t believe they will find any. In black America, the community that invested so much hope in the first black president, the jobless rate is stuck at almost 16 per cent. For many here, the possibility of renewal must feel stubbornly out of reach.

And given the political gridlock after the mid-term elections, the only available policy lever — the Federal Reserve’s decision to pump $600 billion into the economy through quantitative easing — is one whose impact on US growth is uncertain, while its potential to stoke asset bubbles and inflation elsewhere in the world is all too real.

Nevertheless, data and anecdote combine to suggest to me that recovery has begun to take root here as it has in the UK, and rebounding stock markets seem to have sensed that too.