A recovery usually accelerates, but not this time. In fact, it seems that the country has already seen this “recovery’s” highest growth rates, but this does not fit into the msm recovery narrative. Whenever GDP growth accelerates since 2009, people expect it to continue, but it hasn’t. 2.5% is tepid growth for the U.S. We need to achieve a 3.5-4% annual growth rate to begin putting a dent in those unemployment numbers. The country has grown at or above this range exactly four times since 2009 and not once in the last year and a half as illustrated in our chart.
The recovery is not accelerating, and the problem is low demand, particularly from the bottom 93% of the country’s income distribution. It seems a rich person’s recovery is no recovery at all.
Ollie Rehn has been predicting growth or strengthening growth in the Eurozone since it entered recession. Eventually, he was right, and it took less than two years. Read the article carefully. He trumpets some bureaucratic victories and cherry-picked data as evidence for his prediction. How about this evidence?
Businesses have no money to invest to spur growth due to tightening standards from zombie banks:
Consumers have no money to spend; retail sales have been declining for two years save for one month:
When Ollie Rehn cheerleads the Eurozone economy, he conveniently ignores the situation on the ground in Greece and Cyprus, whose economies are dissolving, and in Spain and Italy who are not too far behind.
The Eurozone is suffering from a lack of demand, which will suppress growth for the next few years, no matter what the alphabet soup of Brussels says or does.
Let me get this straight. Indians have realized that their currency is becoming worthless and have been purchasing gold to preserve their wealth. The RBI’s genius plan is to offer to purchase this gold back from the people in exchange for that same currency.
RBI, the problem is that your citizens do not wish to hold your paper anymore. If you want banks to buy gold back from consumers, then don’t offer rupees. Pick another currency instead. Ollie Rehn was just telling us how awesome the economy in the Eurozone will be in 2014, so maybe you could offer Indians euros. Just a thought.
Volatility in emerging markets has been rising in the last two weeks or so, but I believe the trend will cease and retrace a bit after Labor Day when liquidity conditions improve. Unfortunately, this will prove to be a temporary respite until Uncle Ben cranks up the magic money machine again.