My prediction made well over a year ago was that the economic growth we’ve seen in recent times will slow to a halt, and likely begin to crumble, before the 2020 Election works itself out.
Now it may be a bit too early to start hitting the siren, but let’s just say that there’s not a snowball’s chance in hell that I’m going to retract my prophecy.
Emerging signs of weakness in major economic sectors, including auto manufacturing, agriculture and home building, are prompting some forecasters to warn that one of the longest periods of economic growth in U.S. history may be approaching the end of its run.
The economy has been a picture of health, expanding at a 3.5 percent annual pace during the third quarter and driving the unemployment rate to 3.7 percent, the lowest level in almost half a century. But General Motors’ plans to cut 14,000 jobs and shutter five factories reinforces other recent indications that the better part of the expansion is now in the rearview mirror.
Outsourcing has not stopped under President Trump.
It remains an undisputed fact that in this sort of economic system, oftentimes you see the most cutthroat and unscrupulous types rise to the top (with notable exceptions).
So when they see even the slightest possibility of higher shekel flow, they are going to jump at the chance if no regulation or penalties exist.
“We’re in the 10th year of the expansion, and there are some soft points,” said Ellen Hughes-Cromwick, a former chief economist at Ford Motor Co. and the Commerce Department who is now on the faculty at the University of Michigan. “The auto sales cycle has peaked, and the housing cycle also has peaked.”
If interest rates continue to rise, she said, “I don’t really see how the economy can keep powering ahead.”
The vast majority of prominent economic forecasters, including various arms of the federal government and all of the major Wall Street banks, still regard continued growth as the most likely outcome for the U.S. economy in 2019. But there is a broad consensus that the pace of growth will slow as the sugar high provided by the Trump administration’s $1.5 trillion tax cut and spending increases begins to wear off. And some forecasters see a small, but growing, chance of a recession.
President Donald Trump’s chief economic adviser, Larry Kudlow, tried to play down such concerns Tuesday, insisting that the overall health of the economy remained robust.
“There’s a certain amount of pessimism I’m reading about, maybe it has to do with a mild stock market correction,” Kudlow said, before describing such pessimism as misplaced. He rattled off recent economic data — including the most recent jobs report, which he described as “very spiffy” — to highlight the strength of the U.S. economy, before his conclusion: “We’re in very good shape.”
Just for the record, Jew Kudlow’s most famous life-moment was when he said almost literally the same thing as Tuesday back in December, 2007.
Right before the bottom came out in the economy, and we faced the worst collapse since the Great Depression.
The basic cause for concern is a widening gap between the evident strength of the economy this year and weakness in economic indicators that look ahead to coming years. That gap was highlighted Tuesday in the latest data on consumer confidence, which showed Americans remained pleased with their present circumstances, but were less confident that growth would continue.
They say a sixth sense of sorts exists in many folks (especially married women) when it comes to these things.
Therefore, pay attention when wives suddenly start pressuring husbands about possible overtime, savings accounts, and the necessity of staying on at a job to gain a bit of tenure and security.
Some analysts say the focus on what might go wrong is obscuring the reality that the economy remains strong. The primary engine of growth is consumer spending, which accounts for about two-thirds of economic activity. The pace of wage gains has increased, consumer confidence remains close to the post-recession high set earlier this year, and retailers are anticipating a strong holiday season.
“Consumers haven’t run out of money and confidence yet, which means economic growth remains on track,” said Chris Rupkey, chief financial economist at MUFG. Rupkey noted that 46.6 percent of consumers said in the November survey of consumer confidence that good jobs were plentiful, the best figure during the current recovery. “Why is confidence so high?” he asked. “It’s jobs, jobs, jobs.”
There is some good that has come about – the market is still very much in the favor of job-seekers, and many retail companies are at last moving towards the magic $15 living wage.
But there are still problems – rent and utility prices continue to rise (mainly due to areas fighting mightily to remain free from the Colored hordes), debt continues to climb (it’ll be credit card and loan defaults instead of mortgages this time around), and students face tuition rates that are mocked by the rest of the world.
The tax cut was almost certainly just a brief injection to the arm that is destined to wear off just like a cotton shot in a withdrawing heroin addict, and we’ll again be left in the same position as we were years ago.
Without fixing the inherent disease in the system itself, temporarily alleviating symptoms is useless.