There are a couple signs the US economy is recovering. For example, corporate interest rates and bond spreads are returning to normal. Railway traffic is returning to normal. The stock market (DJIA) is back up to nearly 11,000… still down from 14,000 but far from its lows. Consumer spending has been edging up.
But at the same time, there are also signs the economy is not recovering. Bad news about mortgage delinquencies continues to pour in. International shipping traffic is still treading at lows. Even though consumer spending is up, consumer income is down after accounting for government money as charted in my previous post.
Some may point as bad news that unemployment numbers remain steady. But, unemployment does not matter too much in predicting whats ahead because it is generally a trailing indicator.
There are very few reasons to believe the economic disaster we are in will do anything but continue. CBO estimates for the United States GDP(the most popular measure of economic health) as:
2008 $14.4 Trillion (actual)
2009 $14.3 Trillion (actual)
2010 $14.7 Trillion(projection)
2011 $15.1 Trillion(projection)
Source: http://www.cbo.gov/ftpdocs/108xx/doc10871/01-26-Outlook.pdf
That data may look like an economic recovery, but it represents anything but that. First of all, even before accounting for inflation lets look at the estimates after subtracting government spending. Government spending for the US (including federal, local, and state spending) is planned to be:
2008 $5.4 Trillion(actual)
2009 $6.1 Trillion(actual)
2010 $6.5 Trillion(projected)
2011 $6.9 Trillion(projected)
Source: http://www.usgovernmentspending.com/downchart_gs.php?year=1995_2015&view=1&expand=&units=b&fy=fy11&chart=F0-total&bar=1&stack=1&size=l&title=&state=US&color=c&local=s
If we take the GDP data and then subtract out that suicidal spending spree data by the US government, we can see the much better measure of the US economy and its projected growth as:
2008 $9.0 Trillion (actual)
2009 $8.2 Trillion (actual)
2010 $8.2 Trillion (projection)
2011 $8.2 Trillion (projection)
So, we had $8.2 trillion in (non-government) spending in 2009, can expect roughly $8.2 trillion in non-government spending in 2010, then to be followed in 2011 by another $8.2 trillion in spending in 2011. Not exactly a pretty picture, considering inflation will take away from those estimates.
I wouldn’t call what we have an “economic recovery”. What is happening with the economy today is a rampage of borrow & spend mania by the Federal Government that is best described as financial suicide. The economy is treading water at the expense of creation of massive amounts of Federal Government debt. February was a record month for new Federal debt (sourced in previous post). And of course its widely expected that this year over a trillion dollars of fresh debt will be added to the tab so that American’s can feel more secure in their position as debt slaves. The US is not in an economic recovery. The US is an economic suicide of historic proportions.
