Flash back to a couple of weeks ago, when we were in California on vacation. At our hotel in Yosemite, it seemed like a meeting of the European Union: French, Italian, Spanish and British English filled the corridors. I asked a waitress and cashier how many Europeans were there and they both agreed it was two-thirds to three-quarters of the people they served.
So, where were all the Americans? Maybe they were staying in budget motels or camping out on the Valley floor. Maybe the Californians were too smart to travel to Yosemite in high season. Maybe others just didn't want to spend the airfare and $4 a gallon gas. Or maybe they were all shopping at Woodbury Common.
Whatever the reason, it sure looked as if California was in a recession.
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We really have two economies in the U.S. One is holding up pretty well; the other is overwhelmed by foreclosures, tighter credit and higher gasoline prices. In one economy, people are tightening their belts a little, but not too much. In the other, it feels like the worst economic slowdown since the 1980s, or even World War II.
The statistics don't capture the reality. Although jobless claims have risen and Friday's data may show an increase in the unemployment rate over July's reported 5.7%, neither figure has matched those of previous recessions--yet.
And shockingly for the doom-and-gloomers, revised gross domestic product numbers for the second quarter showed a pretty solid increase of 3.3%.
Though largely powered by exports, a real recessiondoes not typically produce that much economic growth.
The deeper you dig into the data, the more clear it is that the U.S. economy is sharply divided, and the fault line is usually where the housing bubble was the frothiest and the housing bust the most severe.
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