Saturday , 21 October 2017


U.S. Economy Won't Collapse Any Time Soon – Here Are 5 Reasons Why

A good way to think about our country’s economy is to think of the U.S. like a boxer. We were knocked flat on our back in 2008 and have since struggled to one knee but have never got back to our feet. [As such,] those conversations that imply we might be on the verge of falling down again are rather pointless…With this much slack in the economy, it’s unlikely that any economic downturn from here will be substantial. Does that mean I think the U.S. economy can’t contract from here? No, but I would be very surprised if we were to experience another blow similar to the 2008 recession where real GDP fell 5%. [Let me explain.] Words: 538

So says Cullen Roche (www.pragcap.com)  in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([  ]), abridged (…) and reformatted below  for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement. 

The article goes on to say, in part:

To put this argument into some perspective, analysts at ING tend to agree. They see the economy as muddling through, but not collapsing. They cite 5 reasons for this perspective:

  • Cyclical sensitive sectors, namely the housing sector and the auto sector, are already weak and are unlikely to contract much more.
  • Households’ balance sheets have improved since the global financial crisis. Lower rates over a considerable period of time benefit net borrowers. Most US households will benefit from low borrowing rates.
  • The trade deficit is likely to narrow due to slower import growth, decline in energy and commodity prices and a weak trade weighted dollar.
  • Decline in commodity prices will check headline inflation and could lift households’ purchasing power.
  • Investors’ fears are based on their most recent experience. The unpleasant memories of the global financial crisis are biasing investors’ sentiments.
Equity markets could be a bit of a different story here. I am actually becoming increasingly concerned about a potential profits recession in the USA as international growth tapers off (remember, the market is not the economy).
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With all of the doom and gloom in the air, [however,] I think it’s important to keep things in some perspective: the downside for the U.S. economy as a whole isn’t enormous here – we just don’t have that much further to fall because we never really got up.
*http://pragcap.com/5-reasons-the-u-s-economy-wont-collapse
 
Related Article:

 1.  Are We On the Verge of a Second Recession?

Is a second recession in so short of a time in the offing? It certainly seems that way. The hope for a continued recovery has grown dim lately as many of the economic indexes are moving towards contractionary territory… There are several concerns pressing the U.S. economy and, in the words of David Rosenberg, chief economist at Gluskin Sheff, “one small shock” could send us into a second recession. [We, for our part, believe that even] another round of Quantitative Easing by the Fed…may not be enough to offset the real problems facing the U.S. economy. [Let’s take a closer look.] Words: 1295

3 comments

  1. I think the American economy will collapse in 2012 or 2013,so my advice to Americans is to buy another home in some other country before their dollar collapses. It would be a perfect disaster for America and Europe. After the USA economy collapses a civil war will start very fast and many Mexican cartels will attack America and kill many Americans. Millions of refugee will move toward Canada but Canada will deploy troops to close their borders. The U.K. economy will collapse soon after America so there will be many black days or months for the Americam and British people. This will hurt the economies of China and Russia and India but China and Russia will survive.
    Bab from Iran

  2. I don’t see the economy slipping into another dip. Here in the real estate market things are still a little slow. However, there is nowhere to go from here but up. Real estate has taken a good hit that put us at the bottom and that’s where we stay for now. With interest rates low the real estate market will continue to become healthy again. There are things that can help the real estate market just like the rest of the economy like jobs.