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  • US Economy Mired in a Sea of Contradictions

    Consumer confidence has plunged over the last month, due in large part to the government shutdown and fear that the US might default on its debt – because of the ineptitude of our leaders in Washington. Normally, when consumer confidence plunges, we would expect a significant slowdown in consumer spending, which accounts for 70% of GDP.

    Yet according to the latest Gallup poll, consumers plan to spend even more this coming holiday season than in the past two years. This would seem to be a major contradiction. However, what this tells me that most Americans have figured out that there was never really a threat that the government would default on its debt, as I opined recently. That’s the good news.

    The bad news is that the delayed September unemployment report was yet another disappointment, even though the headline unemployment rate inched down to 7.2%. New jobs created in September were well below expectations. More importantly, the Census Bureau reported last week that there are now more Americans on welfare than those who have full-time jobs. That is very disturbing.

    Finally, I presume you noticed that our national debt skyrocketed by a record $328 billion in one day following the lifting of the debt ceiling earlier this month. The Treasury had to replenish all those “extraordinary measures” it used to fund the government  since we hit the previous debt ceiling back in May. Our national debt is on-track to nearly double under Obama.

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