“It’s the economy, stupid.” Isn’t it always? There are people out there who have never known a U.S. president who is not called Bush or Clinton — but that will change early next year — and there are people out there who have not experienced an economic downturn, and that will change, too. The last part of the last century and the first part of this, apart from the occasional blip often caused by regional conflict, have been extraordinarily benign from an economic point of view.
Mervyn King, governor of the Bank of England, reminded us recently about the “stupid economy” when he said, in opening remarks to the British central bank’s latest inflation report, “For the time being, at least, the ‘nice’ decade is behind us. The credit cycle has turned. Commodity prices are rising. We are travelling along a bumpy road as the economy rebalances.”