Investing.com - Financial Markets Worldwide

Is The U.S. Economy In Serious Trouble?

Published 04/09/2013, 01:50 AM
Updated 08/21/2024, 03:35 AM
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The Federal Reserve should continue buying bonds through this year due to a "scarring" of the labor market, and even more aggressive policies may be warranted if unemployment remains persistently high, a top Fed official said on Friday

. - Eric Rosengren, Boston Fed Head from Reuters.

That an insider from a high level in the Federal Reserve would remark in response to Friday's jobs (or rather, "jobless") report that more QE may be needed kind of makes you wonder what the "insiders" are seeing that is not being accurately reported by politicians, Wall Street and the media.

I took a stab at looking at some of the data that might not make it into your daily mainstream media news regimen in order to shed some light on the "real" economy:

With the ability of the consumer to spend as represented by retail gasoline sales, the likelihood of a plunge in U.S. exports to Europe and the high probability that the real estate "boomlet" is ending, the U.S. economy could go into a tailspin.

Subsequent to writing and publishing that article, it occurred to me that, in addition to the negative GDP-effect from the pressure put on U.S. exports to Europe by a recession there, most you know that Japan has implemented an extraordinary money printing policy designed to push the yen lower vs. the dollar. This will have the effect of boosting Japanese exports to the U.S., decreasing U.S. exports to Japan and depressing manufacturing further in the U.S.

This situation with the yen makes my analysis even more relevant and probably explains why the Fed is terrified by the state of the U.S. economy. Otherwise why is the Fed adding money to the money supply at a parabolic rate (see my article)? Obviously this makes the argument for gold even stronger, as now it's the U.S.' turn to fire a shot in the ongoing global currency war...

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