Today’s economic news underlines our precarious condition. Third quarter GDP was revised down from 2.5 to 2.0. Goldman Sachs (which seems to run the country now) says that first quarter GDP for 2012 could range from -2.0% to -.5%. Whoa!
The respected blogger Mish of Mish’s Global Economic Analysis throws some more wood on the fire today. He looks at the world and sees a “perfect storm both politically and economically” on its way. Why? Well here’s a checklist from him and others.
1. No Super Committee resolution of America’s financial problems. No deficit reduction and the possible expiration of the payroll tax could harm us.
2. Agencies like Fitch hint at another downgrade for the U.S. or at the least, a “negative outlook.”
3. Europe devolves into more chaos. In fact, they may have to pull a U.S. style Chapter 11 bankruptcy. Aside from the continuing problems of Greece, Italy and Spain, Hungary has announced it will seek aid from the EU or IMF. Austrian banks have been told to limit lending and Belgium has been without an elected government since June 2010, meaning they are without a plan forward.
4. Europe and the U.S. are suffering from a lack of confidence among people. What business will want to expand without it?
5. Turmoil in the Middle East threatens oil, among other things. Egypt/Libya/Syria continue to spiral down. Yesterday, French president Nicholas Sarkozy said Iran’s nuclear program is now “a serious and urgent threat.”
6. Continued spikes in oil prices could easily undermine any progress we’ve made since the last oil hike.
7. Some economists are looking at a student loan bubble.
8. Housing bubble? It’s still there. The past four years have not seen any progress out of it.
9. Did I mention China? Analysts have begun to doubt their economic and growth numbers and worry that they are in actuality in terrible shape.
It makes for a very concerning situation for average Americans.