We’ve been waiting for the U.S. economy to reach escape velocity for the last six years. What we mean is we’ve been waiting for the economy to finally become self-stimulating and no longer require monetary or fiscal stimulus to keep it from stalling out. Unfortunately, this may not be possible the way things are going.
As Milton Jones once revealed: “A month before he died, my grandfather covered his back in lard. After that, he went downhill quickly” (his other grandfather drowned in a bowl of cheerios). A similar fate may await the larded up US economy.
In short, the U.S. economy may never reach “escape velocity” unless it is first allowed to crash. It has been too larded up and larded over with debt for any real sustainable growth to take root. More evidence, to this effect, was revealed this week.
For example, the International Monetary Fund (IMF) anticipates the U.S. economy will expand by just 1.6 percent this year. That’s about one percent less than last year’s estimated growth. In other words, the rate of economic growth in the United States isn’t increasing; rather, it’s decreasing.
According to the IMF, “the slower-than-expected activity comes out of the ongoing oil industry slump, depressed business investment and a persistent surplus in business inventories.” Could this be the twilight of the weakest economic recovery in the post-World War II era? Only time will tell, for sure.
But anyone with an ear to the ground and a nose to the grindstone knows the answer to that question. Business ain’t booming. Moreover, it has become near impossible for corporations to grow their earnings.
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