Thursday, August 05, 2010

Friday's Jobs Report: Outlook Darkens for Economy, Obama - Yahoo! Finance

Friday's Jobs Report: Outlook Darkens for Economy, Obama - Yahoo! Finance

Net of inventory adjustments, the economy demand for goods and services
is growing at only 1.3 percent a year.

In the second quarter, consumer spending; investment in new structures,
equipment and software; and government purchases added 4.1 percent to
demand-but as imports grew much more rapidly than exports, the trade
deficit tapped off 2.8 percent.

The difference, 1.3 percent, is annual growth in demand for U.S.-made
goods and services. That has been the pace since recovery began in July
2009.

Businesses can accommodate up to 2 percent growth in demand by improving productivity and not adding workers. Unless the rapid growth in imports can be curbed, the U.S. economy is headed for very slow growth and rising unemployment.

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A driver of deflation is excess capacity in the economy and too few dollars
changing hands too slowly to absorb it. The tepid 1.3 percent rate of growth in demand shows the economy is at risk for deflation at worst and slowly slogging along for several years at best -- the price of recovery from the horrible hangover from the mortgage industry/Wall Street blowout of the 2000's.

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