On April 7, 2017, the Atlanta Federal Reserve cut its expected GDP growth rate in half for the first quarter of 2017, ending a week ago, from 1.2% to just .6%. Weaker than expected consumer activity and reductions in business investment cut the anticipated percentage. In particular, auto sales have been weaker as sub prime auto loans are becoming more problematic (sounds familiar doesn't it) and lenders are tightening up on credit standards.
This after GDP grew at an anemic 1.6% for 2016. Remember, not all GDP activity is necessarily good for the economy or the country. When you take out garbage like Wall Street derivatives and businesses like payday lenders (one of the fastest growing lines of business in the US) GDP would likely be negative. So much for the supposedly economic recovery.
The truth is that for 90% of Americans there has never been any meaningful economic recovery and it only looks to get worse. Americans hold more debt now than in the 2006-2008 time period. No one really knows what the true unemployment rate is and there is no empirical data on those vastly underemployed.
The very, very modest number of new jobs announced by Trump were already in play and do not put a dent in the problem. A new $1 billion Ford plant will only provide 132 new jobs because the plant will be fully automated.
Assuming these GDP estimates for the recent first quarter hold, or are even worse, what do you think this will do for the unfounded stock market boom. There is no reality or connection of corporate earnings to stock prices. EPS/earnings per share are only up because companies have been buying back shares of stock in mass thus have lower earnings spread across far few shares. However, stock buybacks are malinvestment because it doesn't put a single person to work but corporate executives certainly see higher pay and bonuses.
If the stock market implodes the Federal Reserve will be forced to bring interest rates back down to zero percent and again go on a bond buying orgy. Essentially we will be right back to 2008-a stock market in freefall, zero interest rates causing even more poor investments that do not bolster economic gains, higher unemployment and underemployment, and Americans feeling they have been shafted again.
There will be more demand on public services and but less tax revenue coming in. The deficit will swell as well as the national debt. Increased military spending will widen the debt and deficit even more.
If this isn't bad enough we conducted bombing today in Syria causing outrage by Russia and Iran. Are we headed to World War 3?
The Trump euphoria looks like its on life support. Hang on its going to get very nasty again for many Americans that were told just a few months ago that happy days were here again.