CONVENTIONAL WISDOM WRONG AGAIN?

By Larry Burkett, with Joseph Slife

The older I get, the more I realize that the conventional wisdom, what everybody "knows" to be true, often isn’t true—or wise.

For example, the recession, which some predicted would be long lasting, appears to be over. If so, it would be the mildest recession in the past 50 years.

Indeed, a few economists now doubt whether the economy was in a recession at all, since new figures indicate that the nation’s Gross Domestic Product actually grew slightly over the past year.

But even though the professional prognosticators may have been wrong about the severity of the economic downturn, we do know that the economy hasn’t been doing very well. About 1.5 million people lost their jobs during the past 12 months, while business profits tanked and stock prices dropped sharply.

We also know that 2001 set a new record for personal bankruptcies—at 1,452,030, up 19.2 percent over 2000. I wonder how severe the bankruptcy situation would be if the conventional wisdom about the recession had been right!

Routine and unrevolutionary

Here’s another example of how "what everybody knows" turned out to be wrong. Two or three years ago, economists and reporters were speaking in glowing terms about the creation of a "new economy" based on advances in information technology and telecommunications. The new economy, they told us, would be impervious to recessions and economic shocks.

How times have changed! Now, many of the "new economy" companies that still survive are struggling to stay out of bankruptcy, and many "old economy" businesses are leading the economic recovery.

Economist Robert Samuelson, writing in The Washington Post, put it this way: "Spending on housing, automobiles, furniture, toys, fast food, physicians and dentists—almost every thing that is routine and unrevolutionary—has rescued the economy from the collapsed investment in telecom networks and dot-coms and from the depressing effects of fallen stock prices. The role reversal is stunning. What was the wave of the future has suddenly, and perhaps temporarily, given way to the wave of the past."

Federal Reserve Board Chairman Alan Greenspan is calling this phenomenon "trickle-up economics," as middle-class consumers, apparently unfazed by stock market gyrations and dot-com burnouts, continued to spend steadily on routine expenses.

Better than we thought

It may be a bit to too soon to call this one, but it appears that the conventional wisdom may also be wrong in the matter of where the federal budget is headed this year. The Congressional Budget Office (CBO) says earlier predictions of a deficit this year may have been a bit hasty.

With the economy recovering, the budget picture has improved. In fact, the CBO says the budget could be balanced this year, unless Congress decides to spend more. Well, they will spend more—on farm programs, education, and the war. But, still, the deficit isn’t likely to be as large as previously believed.

God’s wisdom

The above examples illustrate that trying to predict the financial future is a bit like trying to nail Jell-O® to a wall. It’s just not possible! No one, not even the financial experts, can foresee how things are going to play out. That’s why I encourage you not to fret about the future (see Matthew 6:25-34). Instead, focus your energies on "living out" the unchanging financial principles found in the Bible.

The first truth is that God owns everything. The second is that He’s entrusted some of it to you. So, spend wisely, save for the future, and give generously to the Lord’s work. In the end, that kind of wisdom will prove right, because it is wisdom from God.

"For the Lord gives wisdom; from His mouth come knowledge and understanding" (Proverbs 2:6).

Personally I don't believe the recession is over at all, and I believe news like this that is to the contrary is being orchestrated by those who have the most to lose.

"Personally I don't believe the recession is over at all"

Can you prove there was a recession ?

Bet you can't ?

It's purely subjective, however the same people who had their hats in their hands looking for "any kind of work" in the early 70's seem to have their hats in their hands today.

I grew up as a sharecropper's son in Tennessee, and I still recall during the early 70's recession the laid-off engineers from the local engineering firm coming by the house at night looking for work in the fields.

I see the same thing today.

Correction:

"[Borrowing for spending] on housing, automobiles, furniture, toys, fast food, physicians and dentists-almost every thing that is routine and unrevolutionary-has rescued the economy from the collapsed investment in telecom networks and dot-coms and from the depressing effects of fallen stock prices. The role reversal is stunning. What was the wave of the future has suddenly, and perhaps temporarily, given way to the wave of the past."

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