David Rosenberg points out the three simple reasons why the U.S. consumer based economy is unlikely to rebound sharply:
The three most significant headwinds for the consumer this year are:
1. Jobs. Nonfarm payrolls are 5.5 million, or 4.0%, lower now than it was a year ago.
2. Credit availability. Outstanding consumer credit has shrunk $123 billion in the past year (or -4.8%).
3. Gasoline prices. At $2.64 a gallon nationwide, are 75 cents higher than they were a year ago. This is equivalent to a cash flow drain to the tune of $100 billion dollars for the household sector or the equivalent of a 1% pay cut.
Source: Gluskin Sheff
Mr. Roche is the Founder and Chief Investment Officer of Discipline Funds.Discipline Funds is a low fee financial advisory firm with a focus on helping people be more disciplined with their finances.
He is also the author of Pragmatic Capitalism: What Every Investor Needs to Understand About Money and Finance, Understanding the Modern Monetary System and Understanding Modern Portfolio Construction.