Americans have bought into the recovery – I can tell you that. It’s extremely easy to become convinced that the U.S. is over the hurdle. The jobs market is absolutely on fire.
There are more job openings than people available to hire. This is not a typo. At the moment, businesses need 1.3 million people more than there are applicants to fill these positions.
The upside is minimal for this recovery, going forward. With corporations drowning in orders for their goods and services, the U.S. domestic economy is peaking.
What’s startling is that even though this is the case, most Americans are still highly susceptible to any disruption in their salaries. Most Americans has no meaningful savings.
In other words, though this has been the longest economic expansion on record – creating nearly 9 million new millionaires in America alone, doubling the size of this socio-economic group – the middle-class has shrunk materially.
The cost of this economic recovery is not revealed in any balance sheet yet. The point is that we’ve eaten only dessert for 10 years, but the heart attack is closing in on us, cholesterol slowly jamming the arteries. The last one to know about the heart attack is the person having it.
There are no clear forewarnings.
As this chart shows, the insiders, the wealthy CEOs, and high-ranking directors are betting this heart attack is coming now. But they’ve been wrong more than twice this decade.
There are mild attacks and there are severe ones; as for now, we’ve only seen the mild type.
What I want to focus on is the fact that de-dollarization is just not letting up. Clearly, someone IS buying U.S. Treasuries, but it does look like the mysterious buyers are mostly domestic
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For the rest of the planet, well, they’ve eaten their steak, and even if you offer them another juicy one, it seems there’s just no room for it.
De-dollarization has only been this extreme in the era of 2008. Today, the U.S. is strong, robust, booming and growing at ITS peak potential, which is around 2% a year.
Going forward, this is the rate at which the U.S. is designed to grow. This is NOT the 20th century anymore. The country is so wealthy, that at a 2% growth rate every household will be $75,000 richer in one generation, on average, than the previous one.
Of course, this astonishing accomplishment does not disburse equally at all. In fact, it is highly likely that poverty will continue to plague more and more Americans, as the economy becomes far more complex.
The problem is inclusion and how to involve more people in the system in a win-win manner, since the current set up is unfavorable to most people.
The challenge of our times isn’t lack of wealth, but a shortfall of opportunity. Many never succeed since their education level just isn’t close to where it needs to be for the current labor market.
Therefore, the job openings are more abundant than the unemployed pool. The tables have turned. Businesses can’t hire fast enough.
Here’s the bottom line to this – America is not what it used to be. There are many areas in which it lags behind Europe and the emerging markets.
The fragments that are ticking are doing very well, but the demographics that are not are suffering badly.
The government will continue, therefore, to play a bigger economic role, which means that I don’t see any austerity measures on the horizon.
The printing presses will go on, working overtime.
Research Partner, PortfolioWealthGlobal.com
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