How Long Will the U.S. Recovery Last? A Reminder: The False Japanese Recovery in 1998/1999

UPDATE February 2014:

Everybody is blaming the winter for recent weakness. But not many economist aware that most Americans did not profit on rising confidence. Yes, companies are sitting on a lot of cash, but private households do not.

Just the uppper 10% continued spending in 2013 thanks to higher stock valuations. With cheap gas prices, the American producers Ford and GM were leading and selling to their fuel-extensive cars. Despite all the hype about shale oil and U.S. energy indepence, crude oil prices have risen clearly above 100$, natural gas is at 5.50$.


UPDATE November 2013:

Consumer confidence from the University of Michigan

The current state of consumer sentiment is consistent with an economic growth rate slightly above 2%, largely stimulated by wealth gains not improvements in jobs and wages.

Finally companies invest the cash they were sitting on for years, gross business investment is picking up:

US Business Investments

Despite record-high stocks, far lower gasoline prices than in July and Non-Farm Payrolls of over 200K, consumer spending does not pick up. The Savings Rate has risen from 4.5% to 4.7%. Companies are sitting on lots on inventories, the 3.6% increase in GDP was driven by inventories, while consumption rose by only 1.4%.

All these are typical symptoms of a “false recovery”.



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George Dorgan
George Dorgan (penname) predicted the end of the EUR/CHF peg at the CFA Society and at many occasions on and on this blog. Several Swiss and international financial advisors support the site. These firms aim to deliver independent advice from the often misleading mainstream of banks and asset managers. George is FinTech entrepreneur, financial author and alternative economist. He speak seven languages fluently.
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