The economy certainly does suck but it is getting worse. How much is fuel? How much is your food? How much does the doctors charge you now? What are your insurance premiums...staying as they are or going up? As long as the fed is printing more and more money on no financial staus to support the inv=crease in cash printing (seeing that there is no gold to back it up) everything is going up including your stocks and bonds.
Are you ready for the Second Coming?
The perception is that everything's just fine: The continuation of a solid if unspectacular recovery that began in the summer of 2009. Stocks continue to rise. Corporate profits continue to boom. The unemployment rate continues to tick down. Wall Street continues to coin money.
But the reality is that the recovery has never been strong and that many key metrics have recently turned south--despite the fact that the government still has its foot stomped on the stimulus gas.
What metrics have turned south?
Well, first and foremost, GDP growth.
We learned this morning that the economy grew at a pathetic 1.8% in Q1. That's way below the 3%-4% rate that most economists consider normal. And it's miles below the 5%-7% growth that normally follows a recession as sharp and severe as the one we just had.
Meanwhile, the Fed still has interest rates parked at zero, and is still conducting emergency stimulus measures like QE2. And the government's huge stimulus package from 2009 is still driving spending. And we're still spending an absolutely mind-boggling ~$1.5 trillion per year more than we take in (federal deficit)--and piling up humongous debts in the process. And, needless to say, none of this spending--"stimulus" or just normal spending we can't afford--has produced the desired private-sector growth.
1.8% GDP growth in the face of massive stimulus is the equivalent ofsputtering down the highway at 45 miles per hour while you have the gas pedal floored. You might be glad that the car hasn't broken down completely, but you certainly won't conclude that all is well. And you also might conclude--wisely--that if 45 is the best you can do with the gas pedal floored, things may be about to get a whole lot worse.
And it's not just growth that blows.
In the past few weeks, initial jobless claims have ticked back above 400,000 per week, considerably higher than economists expected. Jobless claims above 400,000 are generally considered a sign of a contracting job market, not a growing one. If the recent jobless claims trends continue, the monthly jobs figures may soon go from "okay, not great" to downright lousy again. [GO READ THE REST]
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