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Despite Gains, This Is the ‘Weakest Recovery Ever’: Rosenberg

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posted on Mar, 24 2012 @ 12:06 AM
So much for the US economic recovery eh?

How could there not be any growth with trillion dollar deficits and protracted low interest rates? And growth is still weak! The US economy and indeed to some extent, the world economy, is on life support. May not have a permanent drip, but frequent injections to keep the body from givign up its ghost. Anyone disagree with Rosenberg's analysis?


Recent economic gains have been primarily illusory, driven by weather-related factors that are not sustainable, economist David Rosenberg told CNBC.

In fact, the strategist at Gluskin Sheff in Toronto said in an interview, the recovery has been extremely weak by historical standards and would be even more so if not for all of the deficit spending and money printing in Washington.

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

But it's the type of growth that causes concern.

"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," he said.

Gross domestic product grew at a respectable 3.0 percent rate in the fourth quarter of 2011 but was just 1.7 percent for the year. GDP 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.

Unemployment, though, has fallen noticeably, with the government's headline rate dropping 0.8 percentage points just since August and 511,000 jobs created in January and February.

But Rosenberg said up to 40 percent of those jobs are weather-related and the product of distortions due to seasonal adjustments. Moreover, Americans had more money to spend than normal due to lower heating bills caused by temperatures that averaged five degrees above normal, he said.

"Employment data were affected by the seasonal adjustments," he said. "It felt like March in February, and if you apply the March seasonal factors to February, employment would have actually declined."


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