Change in the wind

I'm going to go out on a limb and predict that the psychology of the American public has turned the corner and better times are ahead. I fully expect a lot of pain is still ahead for all aspects of our economy but positive signs are starting to show.

I'm of the opinion that the most important factor in the entire economy is public sentiment and it sure feels like we've seen the worst of it. History has proven that we are pretty resilient psychologically as times turn tough and quick to bounce back when given a good excuse. We don't like feeling things are bad and have been known to engage in a little self-delusion by stretching to find something good to believe in. We'll even go so far as to ignore the bad news if it doesn't fit with with what we want to feel.

Between Barack Obama's historic election, Christmas, and the New Year, the public has had enough good things to focus on that they're ready to feel good about the economy too. After a few months of horrible economic news, we just went through the holiday season and realized we still have much good in our lives to celebrate and the world hasn't come to an end. We can start writing "2009" on everything and, everytime we do, be glad that 2008 is in the past. Whether you agrees with Obama's politics or not, having a new president and new administration in Washington brings the notion of a fresh start with new ideas.

All that combined indicates to me that there is a renewed optimism that will carry into the public psyche. People will start (cautiously) spending money on all the deals that are in the marketplace. Business owners won't be so quick to layoff employees. Banks will hopefully be a little more workable on existing loans and start lending more money to worthy borrowers and properties. I don't want to minimize the pain that still lies ahead--lots of layoffs, bankruptcies, and foreclosures still need to get cleaned out of the system.

The first thing that needs to change in the economy is the public psychology and I think it has made crucial turn. As Mr. Gibbs says to Captain Jack Sparrow in the first "Pirates" movie: "I think I feel a change in the wind, says I."

More later....