First quarter US GDP came in at a negative 1% yesterday led by a 7.5% fall in business spending following the expiry of tax concessions that had brought forward investment in 2012 and 2013. The US is caught in a Japan-style conundrum of endlessly employing artificial stimulus to steal a little extra growth from the future and spend it yesterday. The trouble is the future keeps arriving with less and less demand as a result.
“We think there is more to this than just weather. Our leading indicators were already weakening late last year,” said Lakshman Achuthan, from the Economic Cycle Research Institute (ECRI)…
The concern is that this recovery may die of old age after five years, even though it has been the weakest expansion since the Second World War, failing to close the output gap or bring the long-term unemployed back into the workforce. The Fed fears it has exhausted its arsenal. “It is too awful to think about what will happen in the next recession, so nobody does,” said Mr Achuthan.” See: US money slump flashes warnings as economy slumps.
And yet it is coming, ready or not…
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