Why would an economist look on the bright side?

“Economists are not known for looking at the glass as half full,” Ms. Coronado said. (This is an enduring observation about his professi...


“Economists are not known for looking at the glass as half full,” Ms. Coronado said.

(This is an enduring observation about his profession. Thomas Carlyle in the 19th century referred to the entire economics profession as “gloomy science,” and given its sound of truth, the gloomy title stuck.)

In addition to inflation, economists are worried about possible asset bubbles. Central bank officials including Robert S. Kaplan, head of the Dallas Fed, and James Bullard, head of the St. Louis branch, have warned that policymakers should keep a close watch on rising house prices. . And as Delta skyrockets, analysts from all walks of life are watching closely to make sure it doesn’t slow down shopping, travel and dining out – all while fears it may slow down.

The gray cloud that seems to hang over the profession might have a silver lining. It could be that by monitoring the risks of high inflation and the threat of impending catastrophe, the profession is preparing America for a more sustainable expansion in the future – a policy where government spending policy is more carefully designed so as not to tax industries that are too large, and where investors believe the Fed will act if necessary, keeping the exuberance in check.

Mr Dutta, an eternal optimist who is accustomed to throwing all-caps tirades against the pessimism rampant in his profession, thinks people could get a little more excited without overdoing it.

“IS THIS A SLOWING DOWN OF CONSUMERS? He wrote in a recent memo, pointing out that the data on credit card spending is holding up. He celebrated the latest jobs report, a robust read, by titling it “JULY FIREWORKS”.

He points out that many people think the economy would be even stronger right now if supply bottlenecks weren’t holding back production and preventing spending. At least some of this spending is likely to eventually occur when these delays are resolved, setting the stage for stronger future growth. In addition, he points out that people are making decisions that they would not make if they had a bleak future in mind: families buy houses, what he calls “the most irreversible asset”. Businesses buy equipment.

He speaks exasperatedly, like someone who has been right before. This is, in part, because he was recently: Mr. Dutta, who has a bachelor’s degree from New York University but does not have the sophisticated doctorates that many of his counterparts demand, correctly argued that the economy would not collapse by 2021, when some Wall Street economists looked for flat or even negative growth readings as infections increased.

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