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Is the Economy “Strong”?

By November 30, 2023Commentary

Not sure what strong means, and definitely not sure I trust any stats coming from the Bidementia administration.  Supposedly in the third quarter real (after inflation) gross domestic product grew by 5.2%.  (BEA Release) (I strongly encourage you to click on the link in the release that leads to the BEA sources for the data, it gives you a good sense of where likely error comes from.)  That would be good growth.  Whether it reflects reality is a different question.  As usual, a closer look raises questions.  One thing that is very apparent is that run-amok government spending is one of the primary drivers, as it’s contribution to economic growth is at the highest level in years.  This spending is fueled by debt, and the negative impacts of that debt and accompanying high interest rates are just starting to impact the economy and consumers.  Consumer spending increases were the primary source of the growth and we know from other data that consumers are stretched, in debt and unable to afford the increased costs of necessities.  Zero Hedge gives its usual appropriately jaundiced view of the data here.  (ZH Post)

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