Is America facing yet another recession?
The short answer is no, at least not before the 2024 election.
First, the classical signs of a recession where production exceeds consumption, or in economic language: where GDP (Gross Domestic Product) exceeds the M2 money supply, are not in place.
Our current GDP increase is a miserly 1.3 % ( actually a decrease when taking population increase into consideration), while the M2 money stood at 89% of GDP (fortunately it is decreasing).
Secondly, the unemployment is very low (still only 3.7%)
The classical recessions (in 1950s and 1960s) started when too many cars were on dealer’s lots more than people could buy.
The automobile manufacturers then laid off workers, the effect of which filtered through the whole economy, creating high unemployment rates.
This current situation will not change much because, by tradition, all governing parties want to have happy voters.
They do this by spending excessive amounts of money. As a result, U.S. inflation, caused by excess buying power, will not recede from the current 5 to 6%.
One concern might be the still un-resolved banking-credit crisis in part due to the fact that the value of their Treasury and mortgage holdings have drastically decreased, eroding their bank assets.
I have seen something I have not seen for many years: banks actually pay interest on deposits. What is troubling that, according to a report, 66% of all customers bank with iPhones. Consider a real big banking crisis and see 66% of all customers yank their deposits out of the bank on a moment’s notice.
Yes, too terrible to contemplate, but it's possible.
One can expect that such current budget-busting behavior will stop after the election.
This then is a time to expect a recession, when the GDP/M2 relationship reverses.
Let’s see what happens.
Dr. Hans Baumann, a former Corporate Vice President and founder of his company, is a well known inventor, economist, and author having published books on scientific, economic, and historical subjects. Read Dr. Hans Baumann's Reports — More Here.
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