Good times rolling by the roadkill

Good news: It’s official, now: the U.S. economic boom is the longest on record. They’ve made it through 107 months of continuous growth.

More good news: Federal Reserve Chairman Alan Greenspan, the steady hand at the nation’s monetary helm, has enlisted for another hitch.

And yet more good news: The unemployment rate is a scant 4.2 percent. We used to say that five percent was the “core” rate, sort of like static on a TV screen that won’t go away. If you told me a few years ago that the unemployment rate would go that low without sparking inflation, I would have said you’re nuts.

And speaking of inflation, even MORE good news: The core inflation rate is just 1.9 percent. (The core rate excludes the volatile food and energy components). Admittedly, that’s 1.9 percent higher than it would ideally be (at least to my mind), but 1.9 percent ain’t too shabby.

High economic growth, low unemployment, low inflation. It’s rare that an economy hits all three of these targets.

And a 107 month stretch of continuous growth proves what I’ve been saying all along about economic cycles: in the big picture, they don’t exist. If economies were governed by cycles, then we wouldn’t have record stretches of growth, we’d have a sinusoidal type of boom and bust. Every time some bozo blabs about an economic “cycle” I wonder if he didn’t mix up his trigonometry text with his economics text.

So is it possible that the U.S. boom will continue? Sure. Right now, there’s no end in sight–but there usually isn’t an end “in sight” before you hit the wall.

Inflation is the key spoiler here. If it looks like its heating up, then Mr. Greenspan will raise interest rates, which will put the brakes on economic growth.

But as Mr. Greenspan riseth, he also cuteth. Earlier in the decade the Fed whacked the fed-funds interest rate to just 3 percent, which is credited with helping flood the economy with loanable cash and fueling the entire happy chain reaction of investment, production, employment, spending, and more investment.

If inflation is the number one bogey man, the stock market is probably number two. It’s up in nose bleed territory, and the specter of a fall back to earth is on the minds of a lot of economists. Never mind technical gibberish, just envision the financial freak-out we’d face if everyone’s juicy stock portfolios went up in smoke. In general, economies drive stock markets, not the other way around, but that doesn’t mean the tail won’t wag the dog sometimes.

But for now, of course, the market remains rich, and so do many Americans who are part of it.

While the Commonwealth sits in the smoking rubble of an economy run off the rails by bad luck compounded by incredible incompetence, Uncle Sam’s well managed economic machine is cruising along, windows rolled down, wind in its hair.

Indeed, the good times are rolling…but we just look like roadkill.