3 REASONS FOR A SLOW RECOVERY

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

About Post Author

Cullen Roche

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.

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