David Rosenberg: US Mired in 'Weakest Economic Recovery Ever'

Thursday, 22 Mar 2012 01:00 PM

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The current recovery is the weakest one ever and being driven by warm weather, not by fundamental improvements taking place in the economy, says Gluskin Sheff economist David Rosenberg.

Deficit spending and loose monetary policies have further propped up the economy, which is much weaker than otherwise improving economic indicators would suggest.

"Is it growing? How could it not be growing," Rosenberg said on CNBC.

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview

"We've got four years of trillion-dollar-plus deficits, we have a Fed balance sheet that's tripled in size, zero policy rates for three years. Of course you're going to get some growth."

It's that kind of artificial growth that should worry the country.

"If you want to take a big-picture perspective, this goes down as the weakest economic recovery ever, despite all the ramp up in government stimulus, and that really tells you something."

While unemployment rates continue to fall, warm weather deserves more credit than policy.

Up to 40 percent of those jobs are weather-related, such as construction jobs coming on line earlier than scheduled.

Warm weather also gave more Americans money to spend due to lower heating bills, which further distorts economic reality.

"Employment data were affected by the seasonal adjustments," Rosenberg says.

"It felt like March in February, and if you apply the March seasonal factors to February, employment would have actually declined."

The Commerce Department reported that the economy grew 3 percent on year in the fourth quarter of 2011, the fastest clip since spring of 2010 and fueled in part by warmer weather. But the economy grew at 1.7 percent for the year.

GDP, or gross domestic product, is on pace for about 2 percent growth in the first quarter of 2012 and many economists expect that number could slow as well through the year.

While high temperatures cut into heating bills, rising gasoline prices are threatening to offset those savings, economists have said.

"The inflation picture is getting a push from rising petroleum prices, but that has been mitigated by weak natural gas prices," Robert Dye, chief economist at Comerica in Dallas, Texas, told Reuters.

"A mild winter has kept a lid on home heating oil prices. The total energy picture at the end of 2011 into February has been muted, but we could see it heat up later this year."

Editor's Note: Wall Street Whistleblower Warns of Meltdown, See His Uncensored Interview



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