So why is confidence so low at the moment? I think there are several reasons for this.
First, the media blows everything out of proportion. There is a constant stream of bad news communicated in very alarmist language. Everything is a threat, a concern or a worry.
The second reason is the current New Labour government. Gordon Brown has for years talked about getting rid of the boom/bust cycle, as if any government had the power to do this.
This Government has mismanaged the economy for many years by, among other things, wasting huge amounts of tax revenue, keeping interest rates too low for too long, taxing us to the hilt and overspending on a vast scale.
The final reason is because Joe Public has been oblivious to the world changing around him. He has lived on easy credit for too long and borrowed far more than he can afford when times get tough and interest rates have to rise.
Well, that time has arrived. At the time of writing, CPI has increased to 3.3 per cent and RPI (the more accurate measure of inflation) is 4.3 per cent. Both indices are rising. There is little doubt in my mind that we are heading for a recession.
So why, in spite of this gloomy economic outlook, am I very optimistic about the future? The reason is because all that is happening is that we are going through a period of economic correction. Back to normality or reality, should I say? Yes, overall, things are going to be tougher for a few years but then the economy will start growing again.
I think we are in a long-term global bull market for shares that could last 20-30 years. Worldwide growth, particularly in the emerging markets, will be massive over that period and bring about fundamental economic change for the better throughout the world, including the poorest of countries. Yes, there will be corrections from time to time but that is just a natural part of the equation.
We have already seen massive improvements in the UK over the last 20-30 years. In spite of all the problems we have encountered over that time, we now have a country where wealth has increased substantially for the vast majority of people, our health is better and we are living longer. So why all the doom and gloom?
For the next generation, we will see living standards reach even higher levels than we have ourselves experienced at the same age.
For the next few years, however, we are going to find it tough, especially in the advanced economies of countries such as the US and the UK. This is because there is huge indebtedness not only of individuals but also of governments. However, in the emerging economies of the world, the future looks really bright. The reason why this is positive news is because it will have a knock-on effect which will, and in many ways already is, benefiting all of us.
The Bric economies of Brazil, Russia, India and China look set to boom even more. These economies as well as commodities and natural resources are the investment areas where clients are going to get by far the best gains over the next few years. Among the bigger, more developed nations of the world, Japan appears likely to perform very well over the next few years too.
So, instead of being gloomy, look to the future with confidence. Things will get better. The only way is up.
Tony Byrne is financial planning director at Wealth and Tax Management