Is the economy about to falter?

From Robert Reich

Data released this morning confirm my fear that the U.S. economy may fall into recession later this year. The economy expanded at an annual rate of just 0.7 percent in the fourth quarter of 2015. My concern has been inadequate demand for the goods and services the economy is capable of producing. This morning’s report showed (1) slower sales of durable goods like cars and appliances, (2) weaker demand from abroad, and (3) a slowdown in business investment.

Meanwhile (4) Consumers are also holding back. Lower gas prices aren’t stimulating more spending because most Americans have to save whatever they can. Boomers haven’t saved enough for retirement; millennials haven’t saved enough to start families, and many are burdened with student debt; many others are in the “on demand” economy and have to save against the possibility of not having enough work. And most of the new jobs being created – although abundant – don’t pay squat.

Finally, (5) the government – which should be the spender of last resort to make up for shortfalls in the rest of the economy – is holding back: The Republican Congress is still wedded to austerity economics, many state governments continue to cut spending, and the Fed is raising interest rates.
Not a pretty picture. What do you think?

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