Jan Hatzius Friday Night Bomb: "We Are Downgrading Our Real GDP Growth Estimate To 1¾% From 2½%"

Tyler Durden's picture

Nobody could have seen this coming: "With most of the news on first-quarter growth now in, the GDP “bean count” looks even softer than it did a couple of weeks ago. The most recent disappointments have come on the export side—with trade now set to subtract significantly from growth in the quarter—and from inventories. Consequently, we are downgrading our real GDP growth estimate to 1¾% (annualized), from 2½% previously (and from 3½% not too long ago)." Some other things nobody will be able to predict: Hatzius dropping full year GDP from 4% to 2.25%; Goldman's downgrade of precious metals, Kostin's 2011 S&P 500 price target reduction by 20%, and Goldman getting its New York Fed branch to commence monetizing $1.5 trillion in debt some time in October.

From Goldman: Do Consumers Have Enough Fuel?

  • With most of the news on
    first-quarter growth now in, the GDP “bean count” looks even softer than
    it did a couple of weeks ago. The most recent disappointments have
    come on the export side—with trade now set to subtract significantly
    from growth in the quarter—and from inventories. Consequently, we are
    downgrading our real GDP growth estimate to 1¾% (annualized), from 2½%
    previously (and from 3½% not too long ago).
  • Other indicators still point to
    solid activity in Q1, but markets have become increasingly concerned
    about growth in the remainder of the year as well. A key reason for
    concern is the sharp rise in gasoline prices so far in 2011—nearly 70
    cents per gallon—which is siphoning off household income at a run rate
    equivalent to $100 billion per year. We are adjusting our headline
    inflation forecasts over the remainder of 2011 to take the surge in fuel
    prices into account.
  • Despite these higher fuel costs,
    consumer spending looks to have grown at a 2½% pace in real terms in Q1,
    and—given strength towards the end of the quarter—is headed for a
    stronger pace in Q2. An important reason for the resilience: the
    payroll tax holiday has helped consumers to absorb the increase in
    gasoline prices over the past few months. (Put another way, higher oil
    prices have fully offset the impact of the payroll tax cut.)
  • Going forward, our forecasted
    reacceleration in spending growth still looks possible, but will require
    a fortuitous combination of circumstances—a modest further pickup in
    the labor market, gasoline price relief, and a benign asset price
    environment that encourages consumers to gradually reduce saving.

With most of the news on
first-quarter growth now in, the GDP “bean count” looks even softer than
it did a couple of weeks ago. The most recent disappointments have
come on the export side—with trade now set to subtract significantly
from growth in the quarter—and from inventories. Consequently, we are
downgrading our real GDP growth forecast to 1¾% (annualized), from 2½%
previously (and from 3½% not too long ago).

Other indicators still point to solid
activity in Q1, but markets have become increasingly concerned about
growth in the remainder of the year as well. Growth-sensitive equities
have suffered in recent days, and some forecasters have taken down their
expectations for growth later in the year. A key reason for concern is
the sharp rise in gasoline prices so far in 2011, which has the
American public—and policymakers—on edge. Retail pump prices are
approaching their peak levels in the summer of 2008 (Exhibit 1). The
extra cost of about 70 cents per gallon, relative to prices at the end
of 2010, is siphoning off household income at a run rate equivalent to
$100 billion per year—income that otherwise could have been spent on
other goods and services.

Despite these higher fuel costs,
consumer spending looks to have grown at a 2½% pace in real terms in Q1,
and—given strength towards the end of the quarter—is headed for a
stronger pace in Q2. Solid growth in consumer spending will be
essential if the US economy is to post above-trend growth for the
remainder of 2011, as we continue to expect. But will households have
enough “fuel” from income growth to sustain such an expansion,
especially with fiscal and monetary stimulus reaching their peak?

In the next few pages we look at the
prospects for household income growth in 2011 and 2012. We find that
the payroll tax holiday has helped consumers to absorb the increase in
gasoline prices over the past few months. Put another way, higher oil
prices have fully offset the impact of the payroll tax cut. Going
forward, a reacceleration in spending growth is possible, but will
require a fortuitous combination of circumstances—a modest further
pickup in the labor market, gasoline price relief, and a benign asset
price environment that encourages consumers to gradually reduce saving.

Moderate Income Growth, with Risks from Taxes and Oil

Our US economic forecast envisions
personal income from wages and salaries, assets, and transfers should
grow at roughly a 5% nominal rate through most of 2011 and 2012.

1. Wages and salaries should grow at a 4%-4½% clip.
This assumes payroll growth in the 200,000 range (just about a 2%
annual growth rate—see Exhibit 2), a small increase in hours per worker,
and growth of about 1½%-2% in wages per hour (similar to recent growth
in private sector average hourly earnings or the Labor Department’s
employment cost index; see Exhibit 3). Ultimately, it’s labor income
that is needed to fuel a self-sustaining expansion, and this is more
important than ever now that fiscal policy is turning towards restraint.

2. Asset income—weak interest, but growing dividends and business income.
A continued low-rate environment should dampen interest income, but
the rebound in the economy should lead to further gains in dividend
income and small business income (proprietors’ income). We envision
this component growing at a 3-5% nominal rate through 2012.

3. Transfer income will be more restrained. Aside
from the annual cost-of-living increase in Social Security in early
2012, which should be more robust next year due to higher headline
inflation this year, transfer income should grow relatively slowly. In
particular, unemployment benefits should dwindle as individuals find
jobs or exhaust their extended benefit eligibility.

Modeling each component of income
growth separately suggests some downside risk to asset income and
transfer income relative to our current forecasts, but potential upside
risk to our current numbers on wages and salaries. Overall, we see
some small downside risk to our current disposable income forecast,
perhaps about half a percentage point. If we assume trend-like
headline inflation of 1½%-2% over remainder of 2011 and 2012, these
calculations would imply real disposable income growth in the 3% range.

Exhibit 4 illustrates the recent
paths of wage and salary income, disposable income, and real disposable
income with our forecasts (in shaded area) through the end of 2012. The
spike in mid-2010 is due to the labor market improvement in that
period, which in turn was partly the result of temporary Census hiring.
The data for recent months show clearly the offsetting effects of the
payroll tax holiday and rising gasoline prices. Wage and salary growth
(dotted line) has been reasonably steady in the 3%-4% range, while
disposable income (the gray line) has accelerated to more than 6%
annualized with the cut in payroll taxes. However, in real terms (black
solid line), there has been no acceleration in income, as higher
headline inflation has absorbed the increase in nominal aftertax income.

As for the future, there are two main
risks to a “steady as she goes” income path. The first—fittingly,
given that it’s tax day—is the increase in payroll tax rates slated for
the beginning of 2012, when the partial payroll tax holiday expires.
This will decrease households’ after-tax income by roughly $110 billion
(about 1%), clearly visible as a drop in income growth in early 2012 in
Exhibit 4. Of course, it’s possible the payroll tax cut will be
extended—next year is an election year, after all—but right now there is
no call to do so either from Democrats or Republicans.

The second risk is the path of
commodity prices; continued increases in gasoline prices in particular
would pose a serious threat, especially if they occurred alongside a
reversion to the higher payroll tax rate. Households currently devote
3.6% of their income to gasoline, on average, so a 10% shock to gasoline
prices is worth 36bp on real disposable income growth. This is only a
“first-round” effect, and leaves out any feedback into employment (i.e.
if lower spending caused companies to become more cautious on hiring,
that in turn could affect future spending) or via other sectors of the
economy.

The bottom line: we see modest
downside risk (unfortunately, a phrase we have been using a lot lately)
to our household real disposable income forecasts in 2011 and 2012.
The best chance for exceeding our forecasts is either a substantial
acceleration in the labor market and/or a large drop in gasoline prices.

Will Consumers Loosen the Purse Strings?

Our forecast has real consumer
spending growth at a brisk 4% pace in Q2 and Q3, decelerating to 3.5%
late in the year and to 3% by late 2012. Given the more modest path for
real disposable income discussed in the previous section, this implies a
drop of somewhere between one and two percentage points in the
household saving rate by the end of 2012. This would be a meaningful
loosening of the purse strings, though mild by the standard of either of
the last two economic expansions.

To test the plausibility of such a
drop in saving, we update our model of the household financial balance.
This measure equals after-tax household income less consumer spending
and net residential investment. It is a broader measure of households’
financial stance than the saving rate alone. Since households think
about home purchases and renovations as part of their spending, we think
it makes more intuitive sense, and it also turns out that we can fit
models to it with slightly more accuracy. Statistically, the key
drivers of the household financial balance are 1) asset prices—higher
asset prices are associated with a lower balance, i.e. more spending and
investment, 2) credit conditions—with easier credit also associated
with more spending, and 3) nominal interest rates—with lower rates
typically discouraging saving and boosting spending.

Our model, illustrated in Exhibit 5,
is estimated only on data through 2005, but has continued to track
actual behavior quite closely since then: the tightening in credit and
collapse in asset prices beginning in late 2007 are consistent with the
observed sharp rise in the financial balance. However, the latest
improvement in the financial environment—particularly the rally in the
equity market over the past several months—suggests that consumers may
be willing to “loosen the purse strings” at least somewhat in 2011. The
forecast for the financial balance in the remainder of 2011 and 2012 is
about two percentage points below the current actual level, implying a
desire by consumers to spend a greater fraction of their after-tax
income. Note this forecast is contingent in part on a continued rise
in equity prices (per our strategists’ forecasts) and gradual easing in
credit conditions. Flat equity prices would still imply a decline in
the household balance, but a somewhat smaller one.

Where does all this leave us? The
models suggest that our income and spending forecasts are feasible and
internally consistent. But they also suggest a lot of things will need
to go right for our optimistic view on spending to become a reality.
First, the labor market will need to continue its improvement, and
probably accelerate slightly, to provide the requisite income growth.
Second, gasoline prices need to stop rising, and ideally retrace at
least part of their recent gains, to ensure that income growth passes
through into increases in real spending. Third, overall asset values
need to rise—i.e. equity price gains need to more than offset modest
home price declines—to ensure households feel comfortable loosening the
purse strings. Finally, of course, households need to behave roughly in
the way our model suggests they should!

Cash Flow Growth is Healthy

One other perspective on households’
spending power is provided by our measure of “consumer discretionary
cash flow”. To calculate this, we take the estimates of disposable
income from the previous section, net out non-cash income, add cash flow
from borrowing or asset sales, and subtract essential outlays for food,
energy, medical care, and financial obligations. Finally, we deflate
the remaining series using an adjusted core PCE price index.

This approach paints a somewhat more
optimistic picture (Exhibit 6). Near term, cash flow grows more
strongly than income. The faster growth of cash flow occurs mainly
because recent data on credit extension suggest a noticeable
acceleration—in particular, nonrevolving consumer credit (auto loans)
has grown steadily over the past six months after declining gradually
over the prior two years. We expect this positive “credit impulse”—a
positive second derivative of credit outstanding—to persist through most
of 2011. That in turn would be consistent both with continued growth
in consumer spending and a decline in the saving rate (and household
financial balance).

A Divergent Impact Across Households

It’s worth noting that the broad
macro themes outlined here have very divergent implications across
households. Households with high exposure to equity prices—typically
those at the top end of the income spectrum—have become more willing to
spend as their net worth recovered quickly following the crisis.
Households with relatively more exposure to housing, and/or who spend a
higher proportion of their income on gasoline—typically those at the
lower to middle income brackets—continue to feel considerable pressure
to economize.

Using data on relative exposure to
gasoline costs from the Labor Department’s Consumer Expenditure Survey,
and to asset prices from the Fed’s Survey of Consumer Finances, Exhibit 7
illustrates the hypothetical impact of changes in asset values and oil
prices since 2005 on spending by the top, middle, and bottom income
quintiles of US households. The concentration of the negative “wealth
effect” among higher-income households is consistent with the sharp drop
in luxury spending and disproportionate damage to higher-end retailers
in the early part of the crisis. Since then, spending at the higher end
seems to have recovered more rapidly, consistent with the implication
of the chart. (The payroll tax cut had a broadly similar effect across
most households, except among the top quintile where it represented a
smaller percentage change in after-tax income.)

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sjradeljic's picture

Now that we know Jan reads ZH.....I wonder if we can find out if The Ben Bernank reads it too....

Oh regional Indian's picture

Awesome Avaatar. ZH should use it prominently somewhere.

Brilliant!!!

ORI

Paul Bogdanich's picture

Speaking of seen it coming I bet the initial print on 1st quarter GDP materially beats the lowered estimates.  It's a set-up. 

jeff montanye's picture

and like the pattern at the individual stock level for twenty or thirty years or so.

Michael's picture

I just heard this on FOX's Red Eye show; The Arabic words  "Al-Qaeda" literally translate to the English words, "The Base".  I nearly fell out of my chair when I heard them say it. I've been blogging this realization for a very long time. Look it up on Wikipedia if you don't know about that.

silvertrain's picture

I didnt use to be as cynic as I am now..But I swear if it looks like a rat, smells like a rat, its probably a rat....

sjradeljic's picture

The avatar is beyond brilliant!!! 

ExploitTheMarket's picture

"Will Consumers Loosen the Purse Strings?"

what good is that when the fucking purses are all empty....

whatsinaname's picture

Meanwhile Belarus continues to pay a price for Chernobyl as do Ukraine and Russia). Belarus to devalue its currency. No wonder I see an advt for Russian love match on ZH. Wonder what Japan will be like 25 years from today ?

Larry Darrell's picture

Your comment = BINGO.

I pulled this from earlier in the article:

"that encourages consumers to gradually reduce saving."

and I thought to myself, "What savings?"

Chuck Walla's picture

 

"Will Consumers Loosen the Purse Strings?"

what good is that when the fucking purses are all empty....

 

Gotta shake the corners out! Some of those slick em-effers hide nickels under their couch cushions. Greed demands that TPTB  take it ALL!

 

SheepDog-One's picture

YES lol the 'consumers' are just sitting out there with purses chock full of cash...according to these retards on Wall St anyway.

Cognitive Dissonance's picture

Nobody could have seen this coming:

We all know the masters of the universe wanted to get through the first quarter before they began downgrading. Now they will rely upon decent first quarter earnings to make it through to the middle of May. Then with the end of QE 2.0 only a few short weeks away they can sadly announce that due to the worsening economy the Fed must reluctantly roll out QE 3.0 plus plus. 

Yawn. Who has the popcorn? I want extra butter please.

whatsinaname's picture

Can the Fed afford to bring QE3 on with crude over a 100 ? A mini-crash is inevitable to justify QE3? Of course, Japan will take the blame on this one.

Cognitive Dissonance's picture

If a market drop/crash is deemed needed in order to build credibility then one will be engineered. The bulging balloon can easily be vented of 10 to 15% of it's air with very little effort. Upon doing so, the formerly incredulous Fed critics and doubting Thomas's will beg for intervention and another chance to kick the can down the road just a little bit more.

Caviar Emptor's picture

They can, they will and in their view they must. First of all the Fed is a one-trick pony: throw money at any problem that arises by going to the printing press, a source of power mightier than the sun itself. And they always feel smugly justified. Secondly they have one top priority: at all costs mask the deflationary depression that's going on in the real economy. Reports from this week showed dramatic residential price declines in CA, MN, FL, NV. Initial new claims jumped this week in the middle of a "recovery". Never mind real adjusted incomes and the inevitable new fiscal austerity measures coming from DC. When they say "Price Stability" these days, they're not worried about inflation. It's deflation they're still fighting. Thirdly there are a bunch of associated reasons they need QE3: holding Treasury yields low as the Treasury rolls debt, discouraging savings, and supporting Treasury issuance in general. They're boxed in. And they can plausibly deny away inflation because the deflation cancels it out, especially in the CPI calculation. 

Hansel's picture

The Fed will keep jerking everybodys' chain as long as people keep letting them.  Deflation and inflation are just 2 weapons in the Fed's arsenal of rent extraction.  They can win both ways.

The Profit Prophet's picture

Excellent summation of the FED conundrum.  Of course the theatre surrounding these machinations will contain an appropriate level of political suspense and high drama, which at the very least should be fun to watch (in a sick sort of way). I haven't yet bought into the argument that someone posted the other day - that the current size of the FED balance sheet with its associated TB roll-over requirement will be enough to keep bond yields low.  I feel the amount of the debt monetization required is simply too large going forward, which speaks to additional QE well beyond any roll-over requirements. We are now in the midst of the most severe stagflation in US economic history - the result of unprecedented Keynesian and Monetarist intervention in the midst of the Greatest Depression - triggered by the Nasdaq bubble bursting.  Everything that has happened since has been the tragic results of unprecedented FED intervention to prevent the massive deflation that should have ocurred.  This was the swamp that bred the debt monster that has now grown large enough to destroy us all.  Thank you Mr. Greenspan; Mr Summers; Mr. Krugman; Mr Bernanke; Mr. Friedman; Ms. Rand; and everyone else who became corrupted by the power of their own intellect, and who considered themselves smarter than the rest.

T.E.I.N. everyone!      

DosZap's picture

Cav,

Agree w/all you said exception Inflation, no way you can deny what is real, and what is slamming Americans up side the head now.

Residential declines are to be expected, we are still in a super over built mode, and no economy to speak of a 22%+ UE rate, and getting worse.

Their will be a QE3, no way out.But, they had better find a new name for it, hide it,, or the Dollar will lose reserve status, and be dumped all over the globe.

Most here have prepped for it, but those that are still holding thousands in FRN's, better get rid of them asap.

knukles's picture

Better excuse would be snow in Arkansas last week.

Who in their right mind spends any time diddliefucking about forecasting GDP of a quarter past when we've all been there done that?

Tell ya' who. 
The false prophet leading the foolish, insecure, insane and demented in their false truth appreciation process ingratiating them deeper into the Hegelian Dialect. 
How's that asks little grasshopper?
Keep 'em talking about anything other than reality of the moment.
Bingo.
You are there.

Good night and good luck.

scatterbrains's picture

I can imagine them taking the market down maybe 30% in one day on a friday, busting all trades more then 5% (except for the banker/connected) and by Monday morning QE3 is launched with a nice gap higher in stocks. All you small fry shorts taking the wood hard and deep and you'll like it bitches.

Astute Investor's picture

Welcome back my friends to the show that never ends.

knukles's picture

Particularly well said.
What even gets better is that with respect to GS's (and in all fairness the whole of the Street does the same, unchecked by the MSM....  LOL) forecasts, they change 'em and hedge 'em so many times over that they can always look back and say "wetoldjazo".

And the people who fawn over this shit nod their heads in rapt discovery of their presumed infallibility and get bought another lunch for their churned not a penny value added commissions.
But the client feels important.
We used to call that fat, dumb and happy.

Bicycle Repairman's picture

Never mind QE 3, lets go all the way to QE 11!!

knukles's picture

Such a deal.

Magnificently smart economist, to whom you get to listen.
Client feels important, coddled
Client directs commission to coddler
Client gets wined and dined
Public pronouncement furthers continuation of QE whatthefuckever
QE makes bundles of free money for the firm
Firm uses profits to grease the politicians and regulators
MSM cheers on the whole of the circle jerk
MSM maintains some sense of importance as only financial traditional outlet with breaking news
That (fill in the blank) from the UK gets to go on the telly to impress himself as his business slides
Law keepers do naught with circle jerk but make noise like blind deaf and dumb arse running about waving hands in air as everybody whose complicit has skin in game
Shit goes bad
Jerk off economist sent to big job in gubamint/international agency to make sure shit goes right (for whom is another question)
Public pronouncements as to save the world/darting snail garter/whatthefuckever
Raise taxes
Wash, rinse, repeat

Reese Bobby's picture

It is that simple IMO.

 

It is also predictable any current President would go with the, "If we don't raise the debt ceiling limit it will cause a global recession" argument.  Because a global recession is coming no matter what.

FIAT_FixItAgainTony's picture

yep some of the ol'

"this just in - data is manipulated."

suddenly a truth discovered rears it's ugly head  - no one has money since only half actually get paid and those folks need to spend it on food and fuel, things not counted, so the experts can't figure out where it went!  puleeeze!

then:

"this just came in - data is re-manipulated."

** y a w n **

Oh regional Indian's picture

I suppose tis can help them buttress their commodity down thesis.

The thing though is to not see Ag/Au as part of the commodity complex anymore. They never were in the first place. it was a classic move to club them with copper et. al. Mind-set shift.

Food and PMs have disconnected, even from Oil it seems. Especially Ag and Ag, the only safety zones I can see.

These times are definitely NOT those times, at all.

ORI

http://aadivaahan.wordpress.com/2010/09/28/of-tipping-points-and-shape-shifting-redux/

sschu's picture

What do they use for a price deflater to get the "real" numbers?  If they are using the CPI, then "real" growth would be over stated.  If they are using a different set of numbers, are they different than the CPI?

Such a bunch of terrible liars.

sschu

Spalding_Smailes's picture

 

The downside of said dollar peg .... 

China's leaders struggle to contain inflation increases

CHINA’S inflation rate rose again in March despite mounting Government efforts to dampen down politically explosive living costs, writes Douglas Hamilton.

Consumer prices in China are up 5.4% over a year ago, the National Bureau of Statistics said yesterday. That is the highest figure in nearly three years and largely the result of spiralling food prices, which rose nearly 12%. The Government’s inflation target is 4%.

The Government also reported that economic growth slowed slightly in the first quarter to 9.7% over a year earlier. That followed efforts to steer China’s rapid expansion to a more sustainable pace after double-digit growth last year.

Chinese leaders said controlling prices was their priority.

On Thursday, Premier Wen Jiabao called for more efforts to bring inflation down, in an attempt to reassure the public the Government was taking action.

“We need to skilfully handle the relationship between promoting economic growth and curbing inflation,” Mr Wen said.

China’s Communist leaders see high inflation as a big political threat because it erodes gains from the country’s economic growth. Food prices are especially sensitive because poor Chinese families spend up to half their incomes on food.

http://www.heraldscotland.com/business/markets-economy/china-s-leaders-s...

 

3.7.77's picture

"Wages and salaries should grow at a 4%-4½% clip"

Wishful thinking, unless this is the unemployment rate increase.

Seer's picture

Change the quote to read:

"Death should come at a 4%-4 1/2% clip"

This planet ain't going to support our desire for unlimited growth.

gkm's picture

Of course nominal GDP will become the real real GDP so expect 10% by EOY.

Yen Cross's picture

I prefer decimal points! Bond price up. Yield down. The 10's were off a few basis point's today.

Yen Cross's picture

Our GDP  Is well over 50. Our ISM is a joke.

pitz's picture

5% wage growth, yeah right...  Lucky if its not -5%, especially when the public sector wages start a'collapsing.

Hansel's picture

But the market "priced it in" already... and other stupid arguments.

Jim in MN's picture

Weekend bombshell in Japan as well:  While rival proposals to dismantle TEPCO's reactors circulate, so does a blueprint to dismantle TEPCO.

http://www.asahi.com/english/TKY201104150129.html

Government considering plan to dismantle TEPCO

BY YASUAKI OSHIKA ASAHI SHIMBUN WEEKLY AERA

A secret plan to dismantle Tokyo Electric Power Co. (TEPCO), the operator of the crippled Fukushima No. 1 nuclear power plant, is circulating within the government.

The proposal, which is associated with a faction of bureaucrats who have long supported liberalization of Japan's power industry, envisages the passing of a special measures law that would put the company under close government supervision before eventually bankrupting it and completely restructuring its remnants.

There are also proposals to smash the company's powerful influence on politicians and the mass media and force executives to give all their pay and severance settlements to victims of the earthquake.

However, a rival faction in the Ministry of Economy, Trade and Industry and the Agency for Natural Resources and Energy (ANRE) and politicians with links to the power industry may try to fight or emasculate the radical proposals.

Sources said internal government discussions about how to handle TEPCO began in earnest around March 28, as it became clear that trillions of yen would be required just to compensate residents of Fukushima Prefecture affected by the nuclear disaster. The plan to dismantle the firm was being circulated by the end of the month.

bob_dabolina's picture

The operator of the damaged nuclear power plant in Japan has admitted it has no detailed blueprint to end the nuclear crisis, now more than a month old.

The admission coincided with workers at the Fukushima Daiichi power plant beginning the painstaking task of…
http://www.smh.com.au/environment/nuclear-firm-says-it-has-no-blueprint-to-resolve-crisis-20110414-1dfwg.html

TrueSkeptic's picture

Your posts have been truly informative.  Thank you.

TrueSkeptic's picture

There is no question about QE3.  The deficits have to be financed.  End of Story.  Buy PM.

Pool Shark's picture

 

Precisley.

This is the exact reason the fed can't pull a 1981-style 'Volker', to stop inflation in its tracks: our national debt would become unserviceable merely at historically normal interest rates, let alone a 20% fed funds rate. (Not to mention what higher interest rates would do to what's left of the housing and auto industries...)

This is what makes PM's a far safer investment today vs. 1980: the fed is in a box and can't afford to let the QE'ing end.

 

Leraconteur's picture

Sustained 1¾% annualized GDP yoy is not viable in the USA as it was in Japan. The USSA has 1 million in annual illegal immigrants and 4+ million births to feed, educate and employ every year. The nation is addicted to growth. 1¾% will condemn the nation to decades of rising unemployment, stagnant wage growth and ruthless competition to get one of the choice jobs in the top 20% with perqs, bennies and more than 5 annual days holiday.