Not much happened in yesterday's markets. Of course, not much has happened for a long time. This leaves most people thinking that not much will ever happen. The Dow will be over 10,000 forever. The dollar seems stable at 1.18 versus the euro. And why would you ever have to pay more than 6% for a mortgage loan?

But two things happened yesterday that might be significant. First, oil seemed to end its correction with a move back towards $60 a barrel. Second, the price of gold went up again to over $512 per ounce (Feb. contracts).

These things are significant because in the happy picture of America's finances and the world economy, they shouldn't be there. It would be like a man with a turban on his head saying mass at Notre Dame, or a sour smell from a bowl of yogurt. Something is rotten, they tell us.

The accepted view of America's economic situation is that it is enjoying strong growth that - thanks to its dynamic economy and enlightened central bank - is not merely sustainable, but eternal. People expect GDP growth of 2% to 5% annually...with inflation between 2% and 3%, and property prices rising somewhat faster.

Gold points an old, gnarled finger at this pleasant scene and mutters, "It ain't necessarily so."

Oil, too, seems unwilling to go along with the Fed's gag. When the price seemed to peak out a month or so ago, economists breathed a sign of relief. "At last," they said, "the crisis is over. Oil will go back down to where it is supposed to be: under $50 a barrel." But yesterday, it looked more like the correction was over. Instead of continuing to go down, oil turned around and headed back up. "It ain't necessarily so," says oil.

Of course, if you look carefully you will see a lot of other things saying the same thing.

The Bush Administration is puzzled as to why it doesn't get more credit for such a healthy economy, writes Paul Krugman in the New York Times. You already know why it doesn't, dear reader: the economy's health is largely a statistical illusion.

"The president made an appearance in the Rose Garden," explains Krugman, "to hail the latest jobs report, yet a gain of 215,000 jobs would have been considered nothing special - in fact, a bit subpar - during the Clinton years. And because the average workweek shrank a bit, the total number of hours worked actually fell last month."

"Back in August the Census bureau released family income data for 2004," he continues, "It should have been a good year...the economy grew at 4.2 percent, its best performance since 1999. Yet most families actually lost economic ground. Real median household income - the income of households in the middle of the income distribution, adjusted for inflation - fell for the fifth year in a row. And on key source of economic insecurity got worse, as the number of Americans without health insurance continued to rise."

"Never mind the GDP numbers," Krugman concludes. "Most people are falling behind."

The numbers are not in for 2005, but we are sure they will show the same
thing: for the sixth year in a row, real median household incomes are going down.

And yet, the economy is supposed to be healthy, dynamic and growing.

It ain't necessarily so, is it?

Bill Bonner is the President of Agora Publishing.  For more on Bill Bonner, visit The Daily Reckoning.