We are now in the 5th year since the “official” end of the Great Recession. Numerous indicators of the state of the U.S. economy point to a non-recovery:
- The participation rate is low and supported by baby boomers working more or coming out of retirement.
- Students (the future labour force) are defaulting on their loans in record amounts.
- Disposable income is still below its pre-recession level.
- An ever increasing share of disposable income is being spent on health care, crippling discretionary spending.
- Higher interest rates are further depressing discretionary spending (home and auto sales).
- All of which is resulting in anemic business and economic activity.
Claims that the U.S. economy is suddenly rebounding have been made before. They are misleading at best and fallacious at worst. It would not be surprising to see further deterioration, which would force central planners to initiate additional unconventional intervention (i.e. Quantitative Easing). [Read more...]