This week, the New York Times published a report that highlighted how economic output in the United States is about $800 billion a year lower than it would be if every single sector was churning out impressive numbers. This figure is a big number for a country that is considered to be the economic powerhouse of the world.
Times Author Neil Irwin cited housing, decreased federal, state and local spending, consumption and business equipment as the primary culprits for limiting economic expansion.
Former Treasury Secretary Larry Summers told the New Republic magazine that the United States economy hasn’t grown in any “financially sustainable way” and its economic problems pre-date 2007, the height of the economic collapse.
Despite the Federal Reserve trying to stimulate the economy through inflation, low interest rates and quantitative easing, the U.S. economy hasn’t really gotten better, and most Americans realize that this is still a recessionary environment.
Reports have shown that artificially low interest rates still have yet to boost capital investments as businesses and consumers are still sitting wary of spending their money.
Summers attempted to explain that “there’s a tendency towards increased saving because of greater wealth inequality and a rising share of profits increased the share of income going to those with high savings propensities [and] because increased uncertainty and greater indebtedness encouraged savings to repair balance sheets.”
The former economic adviser to President Obama added: “You have a change [lowering] in the capital requirements for starting a business. That operates to reduce investment.”
Summers, who was considered to be a candidate to succeed Ben Bernanke as the Federal Reserve Chairman, may very well be right that the economy isn’t doing that well. There is an abundance of data just showing how bad the country is doing, whether it’s in the private market, Washington or the dollar.
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