The WSJ is reporting two bits of good news this morning. One, industrial production rose 0.8% in August, following a 1.0% rise in July. Both results exceeded analysts’ expectations. Fed Chairman Bernanke is now making pronouncements that the recession could be over. The second news item was that inflation remains very low. We have seen the stock markets increase by, what, maybe 35% since the bottom was hit earlier this year?

What I don’t get is how this is happening in the face of various government actions that have garnered scathing criticism from some quarters, and deep concern from many other quarters. The view advanced by many is that towering federal deficits, massive government intervention to rescue the financial markets and auto companies, the stimulus package, and worries over the cost of the healthcare reform legislation should be shaking our economy to its core.

 But that just doesn’t seem to be happening. How do we make sense of this? Do we trust the markets to give us an objective assessment of our actions? Were the doomsdayers off base? Did it turn out that the ocean of our economy was big enough to absorb and dilute the economic pollution from these governmental actions? Whatever the explanation, critics of the Administration need to take note of these positive indicators.

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