Has anyone noticed that only Wall Street talking heads and those trying to sucker you into the stock market are still using the world recovery after the Fed chose not to raise rates in September? That is because an economy that has been artificially driven by tens of trillions of dollars in printed money since 2008 has never built a true foundation for recovery out of the Great Recession seven years later. And following the atrocious jobs report that came out last Friday, new data on the increasing trade deficit has put America into a bind where they are far from being prepared when the next crash occurs.
America’s exports for August came in at the worst in over three years, and validate slowdowns which should show themselves very soon in Q3 corporate earnings.
US exports in August declined to their lowest level since October 2012 and imports from China surged, fueling the largest expansion of America’s trade deficit in five months, the Commerce Department reported Tuesday.
The report illustrates the US economy’s vulnerabilities to a strong dollar and weak demand inforeign markets, which could impose further caution on the Federal Reserve’s plans to raiseinterest rates.
The trade deficit swelled by 15.6 percent to $48.3 billion in August, according to data that isadjusted for seasonal factors. The scope of the increase was accentuated by the unusually narrow trade deficit registered in July.
The size of the gap stands well above the average levels seen in recent years. This puts the onus on US consumers to deliver stronger economic growth because the rest of the world will probably be a drag.
Contrary to all manipulated and adjusted indicators, lower oil prices, coupled with a strong dollar and no growth in industrial or manufacturing output, has placed the U.S. in a severe bind, where GDP should come in negative once again due to this, and declining consumer spending.
Companies in the U.S. have little incentive to expand and focus on exports or real productivity when they can simply buy back stock and borrow money for this purpose at low interest rates. And while the former Fed Chairman Ben Bernanke tries to blame Congress, or out of statute of limitation banker crimes for the situation we are in, the real enemy has always been the central bank, and their cheap money policies which have made real production a thing left to emerging countries.
Kenneth Schortgen Jr is a writer for Secretsofthefed.com, Examiner.com, Roguemoney.net, and To the Death Media, and hosts the popular web blog, The Daily Economist. Ken can also be heard Wednesday afternoons giving an weekly economic report on the Angel Clark radio show.