E Tuesday Talk: The Old Slide And Glide

So what about that old saw "What's good for General Motors (it's rising stock price) is good for America?"

In a TalkMarkets exclusive contributor Arthur Donner takes a look at the post-pandemic economy and doesn't like everything he sees. In Serious Structural Problems Will Remain Even After The US Economy Recovers From The Pandemic Donner notes, "The US economy was experiencing major structural challenges even before the pandemic began, but of course, the unique nature of the supply side pandemic recession has made matters much worse."

Here are some of his additional observations:

"Shrinking Labor Force Participation Is A Major Structural Problem For The US Economy

Recently the labor force participation rate in the US edged down to 61.4% in January 2021 from 61.5% in the previous month. More tellingly, the latest labor force participation rate was more than 1.9 percentage points below its February 2020 level. In other words, about five million Americans have dropped out of the labor force because of the pandemic recession.

The service industries which have been ravaged in the pandemic (e.g., hospitality, travel, etc.,) will find it exceedingly difficult to recover compared to the goods-producing sectors of the economy.

There will be an increase in government interest payments as a % of GDP. This could result in a greater burden on future tax revenues. As well, there is always the risk that the reluctance of markets to buy government debt will cause rising bond yields."

And most problematic for the future, Donner says, "the serious inequality issue in the US will likely become worse with rising income polarization making it more difficult for young Americans to realize their economic dreams."

Pinterest

In Existing-Home Sales Down 7% In February, contributor Jill Mislinski pulls out the latest charts and looks at the figures. 

"This morning's release of the February Existing-Home Sales showed that sales fell to a seasonally adjusted annual rate of 6.22 million units from the previous month's revised 6.66 million. The Investing.com consensus was for 6.50 million. The latest number represents a 7.0% decrease from the previous month."

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William K. 1 month ago Member's comment

Well written and informative, and interesting beside. And it is becoming more and more obvious that the federal reserve is either a bunch of doddering old fools or a team of arch- villians bent on destruction to benefit their "friends" in that top 1%, knowing exactly what damage they are causing.

And the worst part is that the course is set and any rescue is unlikely, since Superman has left the area.

David Marshall 1 month ago Contributor's comment

Thank you for the comments. As for Superman, can't hurt to keep an eye on the sky...

William K. 1 month ago Member's comment

One more thought is that it is not that"bottom 50% that are now investing, but mostly that middle 50%. The bottom quarter of the population still does not have enough to be able to invest. The lucky one have upgraded from "Broke" to Poor.