Today's weaker than expected GDP
report shows just how out of touch most professional economists remain with
respect to the fundamental weakness of the US
economy. After more than four years of nearly never ending monetary stimulus
and more than $5 trillion worth of new federal debt, the economy remains stuck
in a serious recession.
The report shows that federal stimulus and deficit spending
can't create sustainable economic growth.
Although the tepid data shocked many economists, I was not
surprised. I believe zero growth is consistent with the state of the real
economy. The stronger growth numbers that we saw in the second half of 2012
were likely inflated due to pre-election hopes.
The disappointing economic data takes on an even gloomier
tone when considered against factors that will make recovery that much more
difficult. Interest rates are making their first strong upward move in nine
months. Yields on 10 year Treasury bonds are up 60 basis points since the end
of July, and are over 2.00% for the first time since April 2012.
The dollar is falling against most currencies except the
Japanese yen (it is down more than 11% against the Euro since July), and energy
prices are rising (crude oil is approaching $100 per barrel). Although these
conditions are not promising, the stock market seems blissfully out of touch.
As of yesterday, the S&P 500..
Source: Town Hall
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