"u.s. economy is flashing red lights"

  1. dub
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    BEST OF BILL BUCKLER

    September 12, 2005

    The US Economy Is Flashing Red Lights:

    The US Commerce Department has reported that durable goods orders dropped 4.9% in July. But US consumer spending rose a hearty 1.0 percent for the second straight month in July, outstripping a weaker than expected 0.3 percent rise in incomes. The personal saving rate was thus sent into negative territory for only the second time on record. The saving rate, the percentage out of all disposable income, was a negative 0.6 percent - the smallest rate since monthly records began in 1959. This is, quite literally, the real economic consumption of the US capacity to produce at all.

    Economic Cascade Sequence:

    The US new orders index fell from 69.6 to 46.5. The US production index dropped from 70.5 to 56.2. The measure of prices paid by manufacturers for materials rose from 61.3 to 62.9. The employment index dropped from 56.1 to 51.7. These are the economic numbers of an economy stripping all its gears.

    The US new orders index and the production index dives are terrifying. The climbing costs to US business are grim, as is the US employment index. The Chicago Purchasing Managers said that their Business Barometer fell to 49.2 from 63.5 in July! US median household income stood at $US 44,389, unchanged from 2003. But US households compensated for that by using their own houses as if they were ATM machines. US homeowners took $US 59 Billion in cash out of their houses in the second quarter, double the amount in the equivalent quarter of 2004 and SIXTEEN times the average rate for the mid-1990s, according to data released this month by mortgage giant Freddie Mac.

    There are no savings, there is precious little "equity", only the borrowing rolls madly along.

    Now, here comes another stark warning from the US Comptroller General about the current US debt and deficit and the unfunded promises. That huge total comes to $US 43

    TRILLION, says Mr. Walker, the US Comptroller General, who runs the government's Accountability Office. That works out to $US 145,000 for every American or $US 350,000 for every full-time worker.

    America spends $US 1.9 Billion more a day on imported clothes and cars and gadgets than the rest of the world as a whole spends on its goods and services. New US household debt currently fuels over 12% of GDP. Piled on top of all that is the Federal budget deficit and the deficits on the State and local levels.

    When US consumer comes to a halt, 12 percent of US GDP will disappear. It will vanish, unless the government replaces it with its own borrowing, or the Fed literally prints the money.

    Ó 2005 – The Privateer
 
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