Gloomy New Year?

Gasoline is selling for less than $1.50 per gallon, about half the price that prevailed a few months ago. Mortgage rates are lower than they have been in almost four decades, so applications for mortgages are soaring to levels not seen in five years. The unemployment rate is 6.7 percent, not bad by historic standards. Consumers who benefited from substantial pre-Christmas discounts--65 percent-off on cashmere sweaters at Neiman Marcus--are finding even bigger post-Christmas bargains. Anyone heading overseas is ahead of the game: we once had to shell out $2 to buy £1, and about $1.60 to purchase a single euro; we can now buy those currencies for less than $1.50 and $1.40, respectively. A new, dynamic, and best of all, black, president is about to move into the White House, bring the troops home from Iraq, give some 150 million Americans a tax cut, and restore America's prestige in the world. So we must be of good cheer as we digest our Christmas turkeys and prepare to celebrate the New Year.

Hardly. Year-end tidings are not of comfort and joy. Yes, gasoline for the auto tank is cheaper, but who is in the mood for a motor trip when the economy is in a very different tank, to use the non-economist's vernacular for recession? Yes, the unemployment rate is relatively low, but that is because millions have dropped out of the labor market after extended periods of searching for a job, and others have been forced to accept part-time work when they could not find a full-time job. Add those to the workers officially classified by the Department of Labor as unemployed, and the jobless rate doubles to over 12 percent. And that doesn't count those working shorter work weeks or taking pay cuts.

Yes, mortgage rates are low, around 5 percent for the traditional 30-year fixed-rate mortgage. But almost no one can get one, as the banks hoard money and do business only with the least risky applicants, or find that they have laid off so much staff that they don't have enough workers to process applications. Besides, with house prices falling faster than at any time since the Great Depression, who wants to buy a house now when it might be available at a lower price in a few months? Most of the mortgage applications are aimed at refinancing at the new lower rates, so the inventory of unsold homes remains at about twice normal levels, and half of the homes that do sell are going for prices that don't cover the outstanding mortgage.

And, yes, an overseas vacation would cost less than only a short while ago, but who wants to spend money on a trip to some resort where he might end up the target of deranged Muslim fanatics, or when his or her job might disappear while he is sampling the pleasures of London's National Gallery, the Louvre, or the world's fleshpots. Better to stay home.

And most definitely stay away from the stock market, where every time share prices show a sign of life some killer event occurs, the latest being Bernie Madoff's $50 billion heist under the noses of the regulators who ignored warnings because they came from Madoff's competitors. The Wall Street Journal reports that between 2002 and 2005, investors put an average of $62 billion a year into stock mutual funds (unit trusts), before getting nervous and pulling out about $40 billion a year. Well, in October nervousness turned to panic, or resignation, and investors pulled a record $72 billion from such funds. Some put the money in short-term Treasury bills that yield no interest-- what you can earn by stuffing the money under a mattress. One wag says that the way to diversify is to put some of your money under your mattress, some under your wife's, and some under your children's.