The U.S. economy is barely expanding. Not only has growth slipped to 1.3% over the last 12 months, it has failed to reach the sub-par bar of 2% in three consecutive quarters. The big hope? Third quarter GDP could show modest improvement in hitting 2% - the deeply disappointing "New Normal." (Note: There was a time when economists regarded 3% U.S. economic growth as average.)
Does the slowdown imply that a recession is on the immediate horizon? Perhaps not. Yet the ultra-weak recovery prompted the Federal Reserve to maintain near-zero overnight lending rates for 94 months. What's more, Larry Summers' prediction of secular stagnation is beginning to look mighty prescient.
The most recent data? Corporate capital expenditures (CapEx) are contracting. Company profit margins are falling. The speculative default rate has breached 5.5% for the first time since 2009. Even the highly touted health of the labor market appears suspect. The… Read More …
