According to Michael Lombardi, financial expert and lead contributor to Profit Confidential, after rigorous attempts by the Federal Reserve to boost the U.S. economy, the only after-effect of quantitative easing has been a ballooning of the stock market—another bubble created, he says. October 13, 2012
According to Michael Lombardi, financial expert and lead contributor to Profit Confidential, after rigorous attempts by the Federal Reserve to boost the U.S. economy, the only after-effect of quantitative easing has been a ballooning of the stock market—another bubble created, he says. With another drop in U.S. disposable income, Lombardi doubts that economic growth is likely at all.
“Wherever I look, I can’t help but be skeptical about the current state of the economy,” states Lombardi.
Lombardi reports that real disposable income in the U.S., income after inflation, decreased 0.3% in August. (Source: Bureau of Economic Analysis, September 28, 2012.)
“‘Economics 101’ suggests that, when there is more disposable income, spending increases,” reasons Lombardi. “Similarly, less disposable income means lower consumer spending, which is the current case in the U.S. economy.”
Lombardi argues that when the financial crisis began, the Federal Reserve’s main goal should have been to bring consumer confidence into the economy and promote lending: “This way consumer spending could increase and from there businesses could start growing again. After all, consumer spending accounts for 70% of the U.S. gross domestic product,” he says.
In the article “Trillions of Dollars in New Money Later, U.S. Real Disposable Income Falls Again in August,” Lombardi points out that in 2011, U.S. consumer lending was down 40% compared to the lending in 2006. (Source: Wall Street Journal, September 26, 2012.)
The Profit Confidential expert notes that while consumer lending has picked up in smaller cities, it remains under pressure in bigger cities. He adds that consumer spending has to pick up, too, for the U.S. economy to see any economic growth.
“The only way consumer spending can increase is if people have increasing income—something eluding Americans in 2012,” concludes Lombardi.
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.
For the original version on PRWeb visit: http://www.prweb.com/releases/prweb2012/10/prweb10008021.htm