by George Dorgan
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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:
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”.
