America is in its best mood since the crisis, i.e., mildly depressed

Happy days might not be here again, but they seem within sight.

The Conference Board’s gauge of US consumer sentiment reached 92.4 in August. That’s the highest reading since the financial crisis, and the best since late 2007.

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Of course, you’d have to be blind not to notice that US consumer sentiment remains depressed when compared with the years that preceded the Great Recession. In fact, readings in the high 80s and low 90s are about where the US was back in early 2003, amid the beginning of the US war in Iraq (not exactly a buoyant time for the US populace).

Still, the fundamentals of the US economy have strengthened significantly. The economy is producing some of best new jobs numbers since the 1990s. The unemployment rate, even long-term unemployment, has fallen sharply. House prices are up about 8% year-on-year. Auto sales are surging. Interest rates remain low. And oil prices remain stable, despite the horrors of Iraq.

Most recently, the stock market has started climbing once again, a factor that tends to have a positive feedback loop with consumer confidence. (Over the last couple days, the S&P 500 cracked 2,000 for the first time.)

 

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Of course, there are plenty of reasons for gloom if one looks outside the borders of the US. Much of Europe is mired in depression. China seems to be desperately trying to stave off a slowdown. And the conflicts in Iraq and Syria seem more out of control than ever. But for now, Americans seem to be looking inward. (And given the state of the world, one can’t really fault them.)

America is in its best mood since the crisis, i.e., mildly depressed