Salient to Investors:

David Stockman writes:

Reliable signs of an economic recovery are few.

Housing has not moved at all. Private construction spending is 7% below December 2007 levels, 43% below its early 2006 peak, at January 2002 levels nominally, and 1992 levels when adjusted for inflation. Spending is 2.1% of GDP, the same bottom ratio as July 2013 and versus 3.7% of GDP in January 2002, and 4%-5% of GDP during much of the prior two decades.

The apartment construction boom was partially driven by tax credits, which have expired. The new generation of home-buyers is buried under $1.2 trillion of student debt, and there is no sign that they are moving out of their parents’ homes, or that single family starts are breaking out of basement levels.

Commercial construction is essentially flat versus the prior year, at February 1999 levels, and down 40% when adjusted for inflation. No rebound is in sight: vacancy rates remain at quasi-recession levels, while shopping malls are being devastated by e-commerce. Much of the rebound in private non-residential construction from the 2009 bottom was fueled by energy, materials processing industries and manufacturing, all of which now face global deflation.

Jobs data is inflated by part-time jobs in restaurants, bars, etc., which are not full-time employment at a living wage. The index of hours worked in the non-farm business sector is at Q2, 2007 levels. Aggregate real wages and salaries have grown at only 0.5% per year since the crisis, a third of the real rate in the previous business expansion.

The personal savings rate remains at historically low levels, meaning consumption spending can only go down should the current modest rate of wage and salary growth falter.

The US mini-export boom, powered since the recession by energy products and processed materials which now face global deflation, are heading much lower. US exports are now only 10% above their pre-recession peak, so will be a drag on economic growth.

Non-defense capital spending excluding aircraft has been going nowhere since early 2012, and is barely above the pre-recession peak in nominal terms.

Total business sales have posted only a 1% annualized gain during the last 2 years, while inventories rose to record levels in Q2, 2015.

The executive suite in corporate America is now essentially a stock trading room, with options obsessed executives making decisions heavily influenced by the Wall Street casino.

On Wall Street, a recession is never in sight, including the last 10 recessions.

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