This morning's witticism comes courtesy of Jimmy Jean, an economist at Desjardins Capital Markets in Montreal: "The U.S. economy is always at risk of Tebow moment. If that happens, we'll just hope it doesn't get crushed like Denver last weekend."
Mr. Jean is referring to Tim Tebow, the God-fearing quarterback of the Denver Broncos who led his team on an improbable undefeated streak during the regular season, despite serious deficiencies in his game. Pundits howled that it would be only a matter of time before a team led by a quarterback who can't throw a football would come undone. The Broncos made the playoffs and beat the Pittsburgh Steelers in overtime in the first round of the postseason. The New England Patriots beat the Broncos 45-10 last week. Mr. Tebow completed nine of 26 passes.
Reading the Bay Street and Wall Street commentary on the U.S. economy is like reading about the Broncos this season: the professional observers marvel at the unexpected successes, all the while predicting eventual doom.
So most will remain unmoved by a report Thursday by the Labor Department that showed initial claims for jobless benefits plunged by 50,000 in the week ended Jan. 14, to 352,000, the lowest level since April 2008. (The median estimate of 41 economists surveyed by Bloomberg News was 384,000.) The four-week moving average of weekly jobless claims, which better captures the trend, dropped to 379,000 from 382,500 last week.
This is unambiguously good news. A year ago, initial claims were 415,000 and the four-week moving average was 418,500. The U.S. labour market is getting stronger. There seems little reason to worry about the U.S. economy backsliding into a recession.
Inflation was little changed in December, bolstering Federal Reserve Chairman Ben Bernanke's contention that price pressures are a remote threat, giving him room to push for further stimulus. Factory activity in the Philadelphia region expanded in January from the previous month, according to the latest survey by the Philadelphia Fed. Bank of America, the U.S.'s second-biggest lender, reported a quarterly profit, in part because of a 13 per cent increase in commercial and industrial loan balances from a year ago. That's a signal that U.S. businesses finally are putting their record profits to work.
But a good number of economists refuse to get sucked in by the U.S. economy's winning streak. It's like they've set their alarm clocks to blast The Who first thing each morning: Won't Get Fooled Again!
A year ago, Wall Street was feeling pretty good about the U.S. economy, only to watch it flat line for the first half of the year. So even though U.S. consumers have had another year to restore savings wiped out by the financial crisis, and the long decline in the housing market surely has touched a bottom, forecasters actively are refusing to expect good things in 2012.
"The beginning of 2011 is way too fresh in our minds to hold the conviction that `this is it,'" Mr. Jean said in a note to his clients Thursday.
Evidence that consumers are tapping savings to support weak spending, stagnant household income and the effect a European recession will have on exports are just a few of the reasons that Mr. Jean is wary of a "Tebow moment."
However, investors are reading the data differently. The Standard & Poor's 500 Index is up about 4 per cent in 2012, its best start to a year since 1987. They must be Broncos fans.