Chart Of "The US Recovery": Third Time Is The Charm, Or Head And Shoulders Time?

The following chart from Bank of America captures the past three years of American "recovery" quite starkly: the US economy, as measured by the ISM  has so far not double but triple dipped, and the result would have been far more pronounced had the Fed not stepped in after each of the prior two local maxima and injected trillions into the economy. Following peaks in mid 2010 and early 2011, we are "there" again - how long until the Fed has to jump in? And would it have already done so if it wasn't an election year? Which brings us to our question: third time is the charm? Or head and shoulders?

Here is Bank of America's narrative:

By some accounts, the US economy has entered a “sweet spot” of self-reinforcing cycles. In this narrative, job growth is spurring income, boosting  spending and the cycle repeats. Stronger economic news, in turn, boosts asset prices, reinforcing the positive cycle of spending, income and jobs. As a result, optimists argue, the US has returned to its traditional role of leading a global cyclical recovery. This is the third time we have heard this argument during this recovery.

Nothing like a little Bank of America snark for a change. As for those who see the US economy entering a 'self-reinforcing cycle', we have news: recall that two weeks ago none other than JPMorgan found that central planning and the current administration have broken the virtuous cycle, which means that the only option for America is to keep injecting more and more and more diminishing returns liquidity to keep a broken system afloat, until no more can be injected.


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