As much as we would like to believe in the veracity of the U.S. economic recovery, all we still see is fragility and vulnerability. Real final sales growth of less than 1% in Q4 is putrid and there is no growth in real consumer spending being built into Q1 — and we cannot rely on inventories to provide another round of GDP support. Friends, please, we understand the human condition and innate desire to be positive at all times, but the reality is that when it comes to the once-Goldilocks U.S. economy, we have now gone six quarters in a row without seeing one quarter of real GDP growth better than a 3% annual rate. Six quarters in a row of sub-3% growth! That has never happened before in the context of an economy not in recession....
Real per capita disposable income has contracted now for six months in a row. Going back five decades, this condition in the past only existed when the economy was in recession, heading into recession or just coming out of recession... as far as personal income is concerned, this goes down as the most profound non- recovery in modern history.
The big story in December is that even with an improvement in the consumer sentiment polls, the personal savings rate rose to 4.0% from 3.5% over the prior three months. The level of personal savings jumped 12.8% in December, the largest increase since April 2010. It may well have dawned on the consumer sector that those housing-related losses in household net worth in the past few quarters were not temporary
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