We have no quibble with the view that the U.S. economy is expanding at a moderate pace. But we believe Wall Street does not fully appreciate the degree to which growth depends on government support.
Sausalito, CA (Vocus/PRWEB) March 08, 2011
Americans are increasingly relying on U.S. government social welfare programs, reports TrimTabs Investment Research.
In a research note, TrimTabs highlights that government social benefits —including Social Security, Medicare, Medicaid, and unemployment insurance—were equal to 35% of all private and public wages and salaries in the 12 months ended January, up from 10% in 1960 and 21% in 2000.
“We have no quibble with the view that the U.S. economy is expanding at a moderate pace,” says Madeline Schnapp, Director of Macroeconomic Research at TrimTabs. “But we believe Wall Street does not fully appreciate the degree to which growth depends on government support.”
“The pressure on the federal government to decrease runaway spending is intense, while state and local governments are slashing payrolls to eliminate deficits,” notes Schnapp. “Further declines in public-sector employment and transfer payments bode ill for wages and salaries, and they will exact an even larger toll on final demand.”
“We think very few market participants understand that the economy has become heavily dependent on government largesse,” cautions Schnapp. “We are hardly convinced that the recovery can persist without outside aid, so we expect the Fed to roll out QE3 shortly after QE2 ends at the close of June.”
TrimTabs Investment Research is the only independent research service that publishes detailed daily coverage of U.S. stock market liquidity—including mutual fund flows and exchange-traded fund flows—as well as weekly withheld income and employment tax collections. Founded by Charles Biderman, TrimTabs has provided institutional investors with trading strategies since 1990. For more information, please visit http://www.TrimTabs.com.
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