The surest sign that life is back to pre-Sept.-11 normalcy is that the New York real estate market is booming again (reports today's Times). The rest of the country probably doesn't believe how much time New Yorkers spend talking about real estate, so I thought it would be deceptive to not get it into this discussion. You pointed out yesterday that the city's GDP declined 4 percent last year. It suffered the worst terrorist attack in history. The stock market has declined for almost two years and the financial industry is hurting. City employees are being laid off. But condo prices in Tribeca are back up again. What's going on? And should we get in on the action?
I don't understand this economy. After the longest boom in history, a huge stock market bubble, massive corporate and personal over-borrowing, a recession begins that is followed by the 9/11 attacks and the recession ends! In fact the new figures suggest that the economy may never have gone into recession at all. Is this for real? If it is the prelude to a "double dip" then it weirdly makes more sense. If this is it and we're back on the path of growth then economists have to go back to the drawing board again. (Economic predictions of growth for the last decade have been spectacularly off base.) Are we moving toward an economy that responds so fast to shifts in demand that the business cycle has been softened, even eliminated? You have to marvel at the American economy. Its size, diversity, flexibility are just extraordinary.
Anyway, I have to run to a breakfast meeting. When I get back I will present my own Middle East peace plan.
Fareed Zakaria is editor of Newsweek International and the author of The Future of Freedom: Illiberal Democracy at Home and Abroad.