Salient to Investors:
Over the last two decades, US recoveries have been slow and jobless, In every recession from 1948-1990, jobs came back to pre-recession levels an average six months after the economy returned to its pre-recession level. In the 1990s, jobs came back 15 months later, and since 2001, 39 months later. McKinsey estimates jobs will take 60 months to recover to pre-recession levels this time. In the last quarter century, globalization has made it much easier to use machinery or lower wage workers.
Government spending on infrastructure is only half what it was a generation ago.
Larry Kudlow said the shale revolution is phenomenal but limited to private fields – drilling on federal lands is down. Kudlow is worried about the cyclical recovery, and says Europe is making an austerity mistake.
Chrystia Freeland of Thomson Reuters Digital says the shale revolution is a big thing and the new reality. Unlike in America, Europeans cannot walk away from their mortgages.
Zanny Minton Beddoes of The Economist says the cyclical recovery has weakened and the short-term outlook is weak, but sees secular improvement. America has gone far further than the other economies to undo the excesses that had built up, Housing is recovering, household debt is falling, Europe is worsening, the policy mix is mad, there’s an investor strike, and a “Lehman-type cataclysm” is possible.
Zachary Karabell of River Twice Research says the American debate is too obsessed with government policy, and is missing the fact that 70% of economy is the private sector. Karabell doesn’t buy the uncertainty argument as to why companies aren’t spending.
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