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Obama Says He Has No Fear Of A Double Dip

Written by admin | Aug, 8, 2013

sta-economic-output-composite-index-060611In today’s AP report by Desmond Butler “After a spate of discouraging economic reports, President Barack Obama insisted Tuesday he’s not afraid of the country slipping into a double-dip recession. But at the same time he displayed some impatience that the pace of the recovery has ‘got to accelerate.’

‘Obviously, we’re experiencing some headwinds,’ Obama said at a joint news conference with visiting German Chancellor Angela Merkel. He said it was unclear whether the latest unemployment report, which showed a slowdown in job growth, was a one-month disappointment or part of a longer trend.

But Obama said his administration was taking a range of steps to boost the economy, and that the nation is bound for long-term economic growth.

‘We are on the path of a recovery but it’s got to accelerate,’ he said.”

It is important for you to understand, when it comes to protecting your personal wealth, that the media, the economists, Wall Street, the Federal Reserve and the Administration can NOT come out and tell you what we all already know; that we are in a tough economic situation.    Imagine how the markets would react if Ben Bernanke came out yesterday and said “…well, all the stimulus we have plied to the markets has been for naught-the ship is sinking.” No sooner would those words have left his mouth the markets would have tanked.   Oh wait, it did.

The same thing with Obama. He knows that employment has been anemic and not even strong enough to cover the new entrants coming into the job market on a monthly basis. He knows that it is more than a one month problem and he also knows that the trend of growth in the economy is not at a level to support employment growth. However, if he had said “…we took a shot at it but the problems that exist are just great and most likely the economy will slow substantially from here,” almost immediately the US consumer would react from fear by slowing consumption, hoarding cash, etc. and immediately throw the economy into recession.

Here is the real problem.   The administration is trapped in a box.   They can’t let interest rates rise because any significant increase in rates will kill any potentially budding economic recovery. They can’t stop trying to support the economy monetarily because it is the only thing keeping the patient’s heart beating at this moment.  Unemployment has to be tackled in some manner, and quickly, because no President has ever been reelected to office when unemployment was above 8% but that can’t be done without getting small businesses to hire and with such a cloudy economic outlook they are in no mood to take on further risks.

The economy is slowing and all you have to do is look at a variety of recent economic reports showing that recently peaks have shown up in manufacturing, production, employment and even today’s Job Open and Labor Turnover survey showed a decrease in job openings.   However, all you really have to do is just take a look at our STA Economic Output Composite Index which confirms what we already know. This particular economic spurt created by the last round of QE has now come to a conclusion and without further stimulus the current economic cycle will slow more and turn into much more than just a “soft patch”.

There has never been two back to back soft patches in an economy post a recession where the economy did not wind up back in a recession. So, while Obama, the Fed, various economists and Wall Street (who has a vested interest in keeping your money invested all the time) keep stroking their violins assuring you everything is just fine – as an investor you may just want to check to make sure the ship isn’t still rapidly taking on water after striking the financial crisis iceberg.

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