While all the talk at present is about economic corners turned and markets charging ahead, no one is paying much notice to an American economy that’s deteriorating right before our eyes.
These myopic commentators seem to be simply moving past the now almost-universally held conclusion that, before the crash of 2008, our economy was on an unsustainable course. If these imbalances had been corrected, then perhaps I, too, would be joining in the euphoria. But evidence abounds that we have not veered at all from that dangerous path.
The U.S. Bureau of Economic Analysis just reported that consumer spending as a percentage of U.S. gross domestic product (GDP) has risen to 71%, a post-World War II record. This level is notably higher than other wealthy industrialized countries, and vastly higher than the levels sustained by China and other emerging economies. At the same time, our industrial output is contracting, our trade deficit is expanding once again (after contracting earlier in the year), and our savings rate is plummeting (after an early year surge).