We’ve said it before... but here we go again : THERE IS NO RECOVERY OF THE AMERICAN ECONOMY! There. This « recovery » has been touted these last few months with the mass media repeating it ad nauseam, and « no one should doubt it ». And quarterly growth numbers seemed to confirm it; for two quarters in a row, the third and fourth of 2013, the United States’ GDP had grown over 3%... victory!

Unfortunately, the numbers for the fourth quarter have been revised to the downside, and sharply so, going from 3.2% to 2.4%. But, as could be expected, this revision was good for only a few lines in the media and was quickly buried by other « breaking » news. We should always keep in mind that being well informed starts by not being limited to headlines.

Twice in the past we’ve seen two consecutive quarters with a little over 3% (2nd and 3rd quarters 2010, 4th quarter of 2011 and 1st quarter 2012), bringing hope of a recovery, but each time the trend lost steam, though the media were selling us the end of the crisis!

It’s been the same story since March 2009, when Wall Street started to recover after the long slide triggered on September 15, 2008, by the failure of Lehman Brothers. And why, do you ask, stocks started to rebound in 2009 (exactly five years ago)? Was it because the worst of the crisis was behind us and that outlooks were becoming more encouraging, like was explained at the time? Not at all. It was for a very simple reason : That date marks the start of the Fed’s first quantitative easing (QE) plan.

Since March 2009, QE is what makes Wall Street tick. Each time QE stops or simply tapers, like now, the stock market breaks or becomes indecisive. This goes to show that there is no real self-generated endogenous economic recovery (investments, profits and salaries), but only bubbles in some assets (namely stocks and bonds) that create artificial wealth for their owners.

We must see the reverse side of the coin : Despite a $65Billion-a-month QE and an important budget deficit (more than 4% of GDP), growth hardly exceeds 2%... With the U.S. population growing by 1% a year, this corresponds to a real growth rate of 1% a year. And that is if those are the real numbers... but that’s another problem (inflation is underestimated... if we only add 2% to it we get to zero growth, because it is calculated by substracting nominal GDP growth from rises in prices). Well, to sum it up briefly, the situation is not progressing well. Meanwhile, debt and risk are certainly progressing very well.