This blog has largely focused on the changing trends in key economic indicators. While the 3.5% jump in last quarter's GDP growth largely confirms the start of economic expansion there are still many measures which haven't shown any evidence of turning yet.
Unemployment carries the largest weight and is expected to start a downward trend by the first quarter of 2010 -- hopefully sooner. By slowing income growth, unemployment also weighs on consumer confidence, slows sales and weighs on consumer credit.
Consumer credit is not only weighed down by demand but supply as banks continue to tighten lending standards. While the rising stock market is helping to lift demand the massive plunge in household wealth and the quarter century high in unemployment will continue to hold back spending and credit demand.
In contrast, the government is on a credit binge after adding $1.7 trillion to the public debt over the last fiscal year. Total outstanding debt is now nipping at the $12.1 trillion debt limit as the annual budget deficits aren't expected to fall below 1/2 trillion dollars over the next decade. Pressure is building on the Administration to find (create?) some solutions here.
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