Building Faithin the Future

摘要

Wishful thinking, or a case of the mar-ket getting ahead of the curve? The U.S. government reported last month that the economy had contracted at a worse-than-expected annual rate of 6.1 percent in the first quarter-and yet markets rallied. The fact that business inventories plunged in the quarter while consumer spending ticked modestly upward suggested to some investors that the green shoots of recovery would soon start sprouting. What will the next "good" news be-an unexpected uptick in inflation? It's not surprising that investors, consumers and even policymakers are grasping for clues. One of the defining features of the financial and economic crisis is how it has upended so many once-unquestioned assumptions. Only a few years ago, it was common wisdom that financial sophistication fostered stability and increased prosperity, that U.S. households had ample wealth to support their borrowings and that emerging-markets economies were on an irreversible course to achieving first-world standards of living. Now that so many assumptions have been exposed as faulty, no one seems to know what to put faith in.