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The Single Largest Driver of the US Economy is About to Collapse
The markets continue their dead cat bounce while the economic data worsens.
First quarter US GDP was revised down from an annual rate of 2.4% to 1.8%. The drop was due to lower personal consumption expenditures than initially forecast.
This is the crux of the US’s current economic woes: consumer-spending accounts for roughly 70% of our GDP. And QE does nothing to help incomes, which drive consumption.
The US Federal Government has subsidized a weak economic recovery via food stamps and other social program, but the private sector is lagging with most of its hiring coming in the form of temporary or part-time jobs.
The Wall Street Journal ran this graphic yesterday. Anyone who is banking on consumers to continue spending as they have is out of their mind.
Regarding the stock market, it’s important to note that all market collapses follow a similar pattern of:
1) The initial drop breaking support
2) Bouncing to re-test support
3) The larger drop
The S&P 500 has completed #1 and is now in #2:
This move could take us as high as 1,625. However, if the market fails to reclaim its trendline we’re going down as far as 1,500 in short notice. And if we take out that level we’re in BIG TROUBLE.
If you have not taken steps to prepare for a market collapse, we have a FREE Special Report that outlines how to prepare your portfolio. To pick up a copy, swing by:
http://gainspainscapital.com/protect-your-portfolio/
Best Regards
Graham Summers
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Must.....Consume....MOAR......burrito toppings.....Brawndo.....
99.9% of all species that ever lived are extinct. It's a numbers game, and methinks the odds are not in our favor. We're next.
Oh yea definitely agreed! How can a species bent on self-anihilation ever survive for long?
Free money can only take you so far. For a real recovery to emerge, productivity must grow, and workers must receive a share of this growth via wages. Tepid consumer spending belies the mainstream media's recovery narrative.
http://dareconomics.wordpress.com/2013/06/26/around-the-globe-06-26-2013/
a change of flawed trade policy might help. Getting 'productivity' to the point of 'global competitiveness' with slave wage labor markets would be a neat trick.
Productivity is the only savings the future can have. Training and education and investment are the only tools with future utility. The future economy will have to produce what is needed at that time in order for there to be any "wealth". You can't save education or healthcare or corn, you have to keep growing the resources to provide it, human resources and top soil for instance.
Graham is fucking useless
How about this: infinite growth is impossible. Things grow until they exhaust their resources, then collapse. Without collapse there can be no growth. It's a matter of luck when you are born. Do you mature in a growth or collapse phase?
Since I am old, my response is withdrawal and self-reliance. I grow my garden and drive little. Hopefully I die of natural causes before the collapse. If not, the collapse will kill me anyways.
Increased taxes = less consumer spending.
It ALWAYS has.
increased taxes on the super rich means less collective debt and reigning in the tax holidays.
Asking the super rich who own the government to tax themselves more is always an enjoyable exercise. And you can buddy up with Brer Buffet who begs to be taxed more while he chuckles about all the billions he makes using ties with government to profit at your expense.
Fucking bankers are as dumb as a box of rocks. If printing money did anything positive Bangladesh would be a world financial center.