It's The Economy Again, Same Problem As Last Year

The consumption bubble, consumption at the expense of savings, investment and future production arises from them, will be difficult to "fix" as long as short-term tools are chosen to solve a long-term problems. Easy money, liquidity, and the illusion of the endless plateau of prosperity based on debt fostered America’s propensity to consume in excess. How ironic that easy money and liquidity, two main drivers of America’s consumption problem, have been chosen to solve it.

While stimulus, bailouts, and infinite QE have helped to maintain the era of consumption (1982-2000), it is beginning to show signs of strain. Ultimately, this up trend, regardless of the size and number of policies designed to kick the can down the economic road, will succumb to the laws of practical economics. They simply state that the trees of economic growth, watered by debt, do not grow to the sky.

Personal Consumption Expenditures (PCE) As A %GDP and Personal Consumption Expenditures As A %GDP Average from 1947


Headline: State of the Union: It's the economy, again

Addressing a demand for economic answers, President Barack Obama will try to convince the American people and a divided Congress that he has a vision for speeding up job creation, promoting spending on the core of his agenda but promising to rein in a growing, staggering debt. His State of the Union address will reflect reality: The economy trumps all.

To a nationwide television audience Tuesday night, Obama will home in on jobs, the issue of most importance to the public and to his hopes for a second term.

Source: news.yahoo.com