With jobs scarce and almost 50% of all Americans on some form of government subsidy, it is hard to imagine how confidence can be created in consumer spending to create GDP growth.
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New York, NY (PRWEB) August 06, 2012
According to Michael Lombardi, lead contributor to Profit Confidential, real median household income is currently at the same level it was at back in 1995. Lombardi asserts that under these circumstances, economic recovery is unlikely.
In the article “American Real Incomes Fall to 1995 Levels,” Lombardi highlights that it is crucial that real disposable income grow in order for consumer spending to take place. Real disposable income, he explains, measures the average American’s income after adjusting for inflation (as reported by the government) and taxes.
“Seventy percent of GDP growth here in the U.S. is dependant upon consumer spending,” says Lombardi. “With jobs scarce and almost 50% of all Americans on some form of government subsidy, it is hard to imagine how confidence can be created in consumer spending to create GDP growth.”
Lombardi notes that costs for education since 1995 have increased by hundreds of percentage points, along with a significant rise in commodity prices, increasing foods cost and the price of goods.
What Lombardi thinks is worse is that, with weak employment growth in the U.S., wages in general have not grown.
“This is natural,” he reasons, “because companies do not feel pressure to raise wages to attract employees when there are so many looking for a job.”
Ultimately, Lombardi asks, “How is consumer spending going to pull the U.S. into an economic recovery with strong GDP growth under these circumstances?”
Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market... before it plunged.
Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.
To see the full article and to learn more about Profit Confidential, visit http://www.profitconfidential.com.
Profit Confidential is Lombardi Publishing Corporation’s free daily investment e-letter. Written by financial gurus with over 100 years of combined investing experience, Profit Confidential analyzes and comments on the actions of the stock market, precious metals, interest rates, real estate, and the economy. Lombardi Publishing Corporation, founded in 1986, now with over one million customers in 141 countries, is one of the largest consumer information publishers in the world. For more on Lombardi, and to get the popular Profit Confidential e-letter sent to you daily, visit http://www.profitconfidential.com.
Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.