The reluctant US consumer remains a drag on global growth and cyclical recovery in raw material markets
The reluctant US consumer remains a drag on global growth and cyclical recovery in raw material markets. Statistics from the US Federal Reserve show household debt at the end of March still 6% below the level of debt at the end of March 2008 before the full onset of the subsequent financial crisis. Retention of low debt levels contributes to a less volatile policymaking backdrop but has a negative impact on the overall pace of growth. Since the early stages of recovery from recession, US consumption spending has battled to grow at 4% a year. Prior to 2008, a 4% growth rate was the bottom of the likely range of outcomes. Other factors, like labour force participation and industrial structure, are having an impact but US economic growth appears highly unlikely to regain its prior momentum without additional debt.
John Robertson is Chief Investment Strategist for PortfolioDirect a provider of resource sector investment stock ratings and portfolio strategies for mining and oil and gas investors. He has worked as a policy economist, corporate business...
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