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Thursday, August 5, 2021
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The US is Experiencing an Amazing Economic Recovery

#economic, #recovery

A close review of the data says that the US economy is in a good place in here“– Paul Ebeling

Consumer spending is robust and activity in the service and manufacturing sectors is increasing at a faster than expected rate.

The labor market stabilized in January, but Thursday’s report on initial jobless claims showed there is continuing pressure for workers.

And with Congress having already passed trillions of USDs worth of fiscal aid/relief/stimulus and more is making its way through Congress, and if it happens will flow into the economy during the next several months. Thus fueling more growth.

The overall trajectory of this economic recovery will look really better when compared to the sluggish 10 yrs of growth seen after the Y 2008 financial crisis under Messrs Bush (43) and Hussein Obama (44).

This V-Shaped recovery is very different from Y 2009 and here is why, as follows:

  • The Y 2009 stimulus was late, small and faded too fast. Today’s stimulus has been timely, huge and very persistent.
  • In this VirusCasedemic world, much of the aid/relief/stimulus’ effect is deferred until the economy reopens.
  • The virus chaos should leave smaller economic scars than the biggest banking and real estate crisis in modern history.
  • Household balance sheets were deeply damaged in the last cycle, they are in great shape overall today.

In the yrs ahead, lots will be made of the difference between present GDP growth and pre-crisis trend growth, and the speed with which this does or does not close.

But a close look at the jobs market, specifically how quickly the gap between peak crisis-era unemployment might close in the wake of the virus-related instant recession nearly a yr ago.

The bottom line

With the already in place aid/relief/stimulus and any additional, will beget more consumer spending power, and a corporate sector that is not dealing with the aftershocks we saw at the start of 2010, a pre-virus chaos labor market could return within 1 or 2 yrs.

Putting all Key elements, we look for a faster return to full employment

According to CBO estimates the economy did not reach full employment in the last cycle until 2017, 31 Quarters into the recovery.

This time the experts expect full employment by Q-3 of Y 2022 or 9 Quarters into the recovery.

Economist Bruce WD Barren points out a Key component to the recovery is The People’s management of their debt noting the following data: “One of the biggest influences on Americans’ success is debt. Too much will put you on the path to bankruptcy, while not enough will limit your ability to buy and borrow a home, vehicle, or any other major purchase. Striking the right combination of good and bad debt and balancing it against your income and assets is a skill that takes years to perfect.

Just as debt determines individual success, state and national debt patterns also influence how decisions are made by economists, investors, politicians, and business leaders all over the world.

Below a selection of Key debt statistics everyone should know heading into 2021.”

These numbers present a clear over view of the United States’ debt picture, offering a wider perspective on how Americans are managing their finances.

  • American consumer debt totaled $14.27-T in Q-2 of Y 2020.
  • Overall consumer debt dropped from a record $14.3-T in Q-1 to $14.27-T in Q2 of Y 2020, the 1st decline since Y 2014.
  • At $9.78-T, mortgages make up nearly 70% of American household debt. The next highest debt category is student loans at $1.54-T, followed by auto loans at $1.34-T
  • Approximately just 3.5% of all American household debt is in delinquent status.
  • Overall debt is highest in the 40-49 age group at $3.57-T and lowest in the 18-29 age group at $.94-T
  • In July 2020, 46% of respondents to a Federal Reserve Survey said they would be able to pay a $400 emergency expense with the money currently in their bank account, while another 38% said they would be able to put it on a credit card and pay it in full at the next statement.
  • Additionally, 37% reported they were “living comfortably,” 40% said they were “doing okay,” 17% said they were “just getting by,” and 6% said they were “finding it difficult to get by.”

Have a healthy weekend, Keep the Faith!

Paul Ebeling
Paul A. Ebeling, a polymath, excels, in diverse fields of knowledge Including Pattern Recognition Analysis in Equities, Commodities and Foreign Exchange, and he is the author of "The Red Roadmaster's Technical Report on the US Major Market Indices, a highly regarded, weekly financial market commentary. He is a philosopher, issuing insights on a wide range of subjects to over a million cohorts. An international audience of opinion makers, business leaders, and global organizations recognize Ebeling as an expert.   

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