Are things really as bad as we think they are?

The Internet is chock full of doom and gloom stories about how the world economy is heading for an inevitable and extreme deterioration. Articles and Internet chat site postings point to all the economic problems which the world is currently grappling with as to support the claims of imminent economic armageddon.

Of course the problems are immense and the solutions are often seen a politically unpalatable: uncontrolled government spending, out-of-control entitlement programmes, bank failures, housing bubbles, rising unemployment, student loans, increased taxes, ever expanding regulatory burdens. peak oil etc etc etc.  Mostly true and all things to seriously worry about.

But in spite of all these problems, the financial world has not ended, most people are still working and there are indeed plenty of positive signs.  Here's a few to consider:

1. US trade: the United States is the biggest single trading nation on earth. You would think that if the global economy were truly contracting and claims of falling demand for Chinese made products were right, US trade numbers would be contracting. They're not. In spite of a small dip so far in 2012, they have been expanding and both imports and exports are well up since the beginning of 2010;

2. PRC imports and exports: reports of the death of China's exports appear to be exaggerated and premature. In fact China's exports and imports have both risen this year;

3. India: industrial production may be slowing but the most recent numbers came in better than expected;

4. US housing: looking good in many areas (not all) and new home building is on the rise. Recent Case-Shiller data would suggest that the market has either bottomed or is recovering;

5. Japan's fading economic miracle: Japan may have all sorts of issues (adverse demographics among them) but GDP per capita on a PPP basis is holding up very well in spite of Japan's deflationary macro backdrop (and no doubt helped by the strong yen);

6. US unemployment: whether the attacks on the most recent US unemployment numbers prove to be correct or merely political spin remains to be seen, but for now it appears to be clear that the US is probably managing to at least absorb the net new entrants to the labour force and may even be doing a bit better than that;

7. poverty is falling: in spite of all the hand wringing about the number of Americans on food stamps, people being unable to afford private housing in Hong Kong,on a global basis the number of people living in absolute poverty continues to fall;

8. US retail sales: it's too early to say whether or not the US consumer is back to doing what they do best but the surprisingly good numbers which came out this month at least put the question on the table.

There are plenty of other stories I could have used to illustrate the point.

Okay, so there is still plenty to worry about. In fact, my inflation depreciated HK$0.02 worth is that there is more to worry about than to celebrate, but it's worth remembering that not all economic and financial news is bad news. Either that or it's time to cut back on the medications.