Free Republic

Recent economic reports indicate that the recovery is struggling to move forward. The main barriers are high consumer indebtedness and mediocre corporate earnings. Consequently, neither consumer demand nor business investment is driving the recovery. Interest rates are low, but Federal Reserve easing has not provided the usual stimulus to spending and equity prices. Part of the problem is the reverse wealth effect from the drop in equity values. The wealth effect from the long bull market made consumers comfortable with more debt, which they used to finance second homes and high living. When the market dropped, much wealth disappeared, but...