Most Popular
1. Banking Crisis is Stocks Bull Market Buying Opportunity - Nadeem_Walayat
2.The Crypto Signal for the Precious Metals Market - P_Radomski_CFA
3. One Possible Outcome to a New World Order - Raymond_Matison
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
5. Apple AAPL Stock Trend and Earnings Analysis - Nadeem_Walayat
6.AI, Stocks, and Gold Stocks – Connected After All - P_Radomski_CFA
7.Stock Market CHEAT SHEET - - Nadeem_Walayat
8.US Debt Ceiling Crisis Smoke and Mirrors Circus - Nadeem_Walayat
9.Silver Price May Explode - Avi_Gilburt
10.More US Banks Could Collapse -- A Lot More- EWI
Last 7 days
Stock Market Volatility (VIX) - 25th Mar 24
Stock Market Investor Sentiment - 25th Mar 24
The Federal Reserve Didn't Do Anything But It Had Plenty to Say - 25th Mar 24
Stock Market Breadth - 24th Mar 24
Stock Market Margin Debt Indicator - 24th Mar 24
It’s Easy to Scream Stocks Bubble! - 24th Mar 24
Stocks: What to Make of All This Insider Selling- 24th Mar 24
Money Supply Continues To Fall, Economy Worsens – Investors Don’t Care - 24th Mar 24
Get an Edge in the Crypto Market with Order Flow - 24th Mar 24
US Presidential Election Cycle and Recessions - 18th Mar 24
US Recession Already Happened in 2022! - 18th Mar 24
AI can now remember everything you say - 18th Mar 24
Bitcoin Crypto Mania 2024 - MicroStrategy MSTR Blow off Top! - 14th Mar 24
Bitcoin Gravy Train Trend Forecast 2024 - 11th Mar 24
Gold and the Long-Term Inflation Cycle - 11th Mar 24
Fed’s Next Intertest Rate Move might not align with popular consensus - 11th Mar 24
Two Reasons The Fed Manipulates Interest Rates - 11th Mar 24
US Dollar Trend 2024 - 9th Mar 2024
The Bond Trade and Interest Rates - 9th Mar 2024
Investors Don’t Believe the Gold Rally, Still Prefer General Stocks - 9th Mar 2024
Paper Gold Vs. Real Gold: It's Important to Know the Difference - 9th Mar 2024
Stocks: What This "Record Extreme" Indicator May Be Signaling - 9th Mar 2024
My 3 Favorite Trade Setups - Elliott Wave Course - 9th Mar 2024
Bitcoin Crypto Bubble Mania! - 4th Mar 2024
US Interest Rates - When WIll the Fed Pivot - 1st Mar 2024
S&P Stock Market Real Earnings Yield - 29th Feb 2024
US Unemployment is a Fake Statistic - 29th Feb 2024
U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - 29th Feb 2024
What a Breakdown in Silver Mining Stocks! What an Opportunity! - 29th Feb 2024
Why AI will Soon become SA - Synthetic Intelligence - The Machine Learning Megatrend - 29th Feb 2024
Keep Calm and Carry on Buying Quantum AI Tech Stocks - 19th Feb 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

What Really Bothers Me About the So-Called U.S. Economic Growth

Economics / US Economy Jan 10, 2014 - 05:42 AM GMT

By: DailyGainsLetter

Economics

Mohammad Zulfiqar writes: On the surface, the data suggest there’s economic growth in the U.S. economy. We hear that the unemployment rate is declining. Incomes in the U.S. economy are increasing. Consumers are buying more and more goods—as a result, we are going to see higher U.S. gross domestic product (GDP). Growth is intact...right?

Sadly, when I examine the details, I really question if this is all a mirage. Is there really economic growth in the U.S. economy?


You see, economic growth is when the general standard of living improves. It’s just that simple. If people are getting jobs that pay them well, you have economic growth. If average Joe American is able to buy the goods he wants, you have economic growth.

There are troubling developments in the U.S. economy that can derail all the talks of economic growth. Unfortunately, they are not very often mentioned in the mainstream media.

First of all, I see a disparity happening between the rich and those who are not so fortunate in the U.S. economy. This is something to be mindful of, because it can have massive side effects. An example of this I witnessed was in the 2013 auto sales for the U.S. economy. The sales of automakers that make affordable and family-oriented cars like General Motors Company (NYSE/GM), and Ford Motor Company (NYSE/F) witnessed subdued growth. On the other hand, luxury car makers saw massive increases. For example, sales of the “Maserati” increased by 74.7%. On the other end of the spectrum, sales of cars and light vehicles at General Motors only increased by 7.3%. (Source: Motor Intelligence, “U.S. Market Light Vehicle Deliveries - December 2013,” motorintelligence.com, January 3, 2014.)

Then, I’ve seen that an unbelievable number of Americans are still using food stamps. Over years, this number has increased—something which shouldn’t be the case during a period of economic growth. As of September 2013, there were 47.3 million Americans using food stamps. (Source: United States Department of Agriculture, “Supplemental Nutrition Assistance Program,” December 6, 2013, http://www.fns.usda.gov/pd/34SNAPmonthly.htm.) This represents more than 15% of the U.S. population! Think of it this way: 15% of the U.S. population needs assistance in order to fill their most basic need—food.

Average Joe American is suffering, all while we hear chants of economic growth. He’s not buying as much as it appears, becoming very cost-savvy. According to ShopperTrak, a company that provides shopper insight, estimates for retail sales during the holiday shopping season of 2013 increased by only 2.7% from the previous year. The company also mentioned that the retailers were “pressured” to offer deep discounts and promotions to lure customers through their doors. (Source: ShopperTrak press release, “Retailers See Fourth Consecutive Annual Sales Increase During 2013 Holiday Season, According to ShopperTrak,” January 8, 2014.)

These factors shouldn’t be taken lightly, because they tell us that the average consumer—the middle class person who’s always been behind growth in the U.S. economy in the past—is now facing headwinds.

If this continues, those who are selling to average consumers will see their profitability decline, because they will have to bring their prices down to lure these consumers into the store. One way investors may be able to profit from this situation is by shorting exchange-traded funds like the SPDR S&P Retail ETF (NYSEArca/XRT).

This article What Really Bothers Me About the So-Called U.S. Economic Growth was originally published at Daily Gains Letter

© 2014 Copyright Daily Gains Letter - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in