More Artificial Growth
President Obama at the Hurricane Center
This week, U.S. stocks rallied on news the U.S. economy grew 2.5% based on American consumer spending. However, a sobering report has since been released, stating the unexpected growth in the third quarter does not mean the economy has recovered, as it was due to spending by consumers trying to repair their homes and businesses after the damaging hurricane, Irene, battered the East Coast of the United States.
Therefore, the government should not relax and deem the economy has turned the corner, as many indicators suggest it has not. Irene created tens of billions of dollars in damage, battered the insurance companies and reduced productivity in the nation. The 2.5% appears to be from people attempting to rebuild their lives, having to repurchase items and on a scale they normally would not, to replace what the hurricane destroyed.
American unemployment is still stubbornly high and that is a massive problem the government has not corrected for almost 3-years. For the nation to truly recover, unemployment must significantly decrease. U.S. exports are also another problem, as they are nowhere near their potential.
The government during the tenures of President Bush and President Obama, did not make manufacturing goods their focus, but spent an enormous amount of time on risky financial instruments, some of which were unmasked as ponzi schemes and other types of flat-out fraud. The problems have been compounded by corporations hoarding stimulus money.
STORY SOURCE
Savings rate falls as spending outpaces income gains
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