No Recovery until 2045?
The comments below are an edited and abridged synopsis of an article by James Rickards
The US economy is now at a perilous point of departure. There was no V-shaped recovery, and one should not be expected. There was a severe contraction in March–April 2020, followed by a recovery in July–September 2020. However, the recovery only made up part of the lost ground, not all of it.
We had a partial, or truncated, V recovery. The economy recovered somewhat, but growth is not back to the prior trend, bearing in mind that the prior trend (from 2009–2019) was itself below the long-term trend.
Now the US is experiencing slowing growth and metrics in employment and wages that are moving sideways or down without having recovered previous highs.
For the past 18 months, the economic damage of the pandemic has been papered over with federal handouts. No doubt some of this spending was needed, especially in the initial March–June 2020 period when there was so much uncertainty and the economy was locked down tight.
The immediate problem is that the economy is clearly slowing down, just as many of these programs expire and before new programs come online.
Some states may have the funds but are choosing not to spend the money because they believe that unemployment recipients should be motivated to get a job. Apart from the merits of these debates, there is no doubt that the federal supplement to incomes is expiring at the same time the economy is slowing for other reasons.
Up for discussion: Already too much debt; the new depression continues; no recovery until 2045?
