P!
It can’t. The day after the election lots of small and medium sized businesses started firing people. You have an islamo-marxist in charge who looks like Mugabe 2.
People with money and people with an IQ above 70 are not spending money because they have ZERO ZERO ZERO confidence in this govt.
They fear the marxist, they fear their taxes going up, they fear the economy and country imploding.
Uh, tax cuts or Zer0 bailouts of individuals.
I’m afraid we’ll have to crash before we ever start to really recover.
I will say that Schneider is picking back up but it is not to the deep level that eventually drives consumer demand. That reality was hit hard this time. It will take years to get a strong consumer base going again.
The consumer was fooled by an unsustainable bubble in housing prices and took on way too much debt. HELOCs were foolishly used to finance purchases of autos, electronics, and lavish vacations. Securitization of the debt let the foolish lenders offload these toxic assets onto foolish investors. When the housing market collapsed, it sent a ripple effect through the economy.
The government - led by both parties over the years - has fudged the numbers on GDP, CPI, and unemployment to hide the severity of the problem. Denninger has noted that state sales tax receipts are the most reliable indicator of the health of the economy. The Rockefeller Institute just released the results for the last quarter and they still suck. The consumer still needs to pay down a boatload of debt before they can spend again. Most of the "growth" during the last decade (or two) was really "pulled forward" demand financed with debt. This is not equivalent to growth produced by increased productions.
I suspect that it will take at least a decade for the economy to recover, if it ever does. I fear a "perfect storm" caused by the convergence of profligate government spending and a lower wage base (caused by off-shoring more and more good jobs) is likely to cause an unprecedented crash before a recovery. Both the Bush and Obama administrations as well as most state governments have spending growth at rates far greater than the growth of wages. As Denninger pointed out in today's blog entry, these are two coupled exponential functions that rapidly diverge. The math doesn't lie. The course is unsustainable. The question is not if there will be a crash but when.
A "consumer economy" is a bllsht economy
Where does "the consumer" make his money to consume with?
Ultimately these consumers should be earning that money via producing
But instead he has gotten his spending money via housing and stock market bubbles and big pension checks
Even if you brought back more factories to the US we are still screwed because much fewer people are needed to work in them these days. Producing a lot more of our oil and gas instead of importing would employ plenty of Americans. Get rid of illegal aliens would tighten up the labor markets. Put up tariffs too
That's not an economy.
That's a scam.