Don’t Trust The Economy Yet; A Recession Is Coming

Perpetual Growth Doesn’t Exist and a Recession Approaches

It can’t be denied. The economic statistics, full of job growth numbers and gross domestic product (GDP) growth, say the U.S. economy has grown at levels not seen since the 1960s. But as you ponder that blissful prospect, consider that a recession is right around the corner.

U.S. economic growth has come at the expense of debt, which low-interest rates have made more palatable. And, there’s a catch.

The U.S economy has become dependent on low-interest rates. The Federal Reserve has not wavered from lifting them and that could tip the balance from growth to another recession.

There’s no doubt that suggestions of an imminent recession seem paradoxical if not totally delusional. Clearly, the United States is enjoying an intense period of recovery.

Deceptive Optimism

The macroeconomic data, the numbers, have not been this good in years—or in decades. But looks are deceiving.

The economy has been brilliant for some, which has helped skew the numbers toward the bullish side. Moreover, many are taking President Donald Trump too literally.

They think he has somehow, in less than two years in power, put America on a path to perpetual growth.

In fact, the real engine of growth, the motor that has driven the stock market’s excellent performance and its apparent resilience to shocks, doesn’t come from the White House.

It doesn’t come from Congress either. For that to happen, politicians would have to have discussed some kind of policy.

Bickering Is What Passes for Policy Nowadays

That has been largely absent from Washington, consumed as it has been with partisan bickering and grand inquisitions about foreign plots to hijack American democracy.

Rather, the so-called “invisible hand” of the market could not be more apparent. As it happens, there are two such hands; they belong to the Chair of the Federal Reserve. The Fed has pumped the markets with liquidity and a sprinkle of low-interest rates.

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