Obama’s Zero-Growth and Zero-Future Economy
April 27, 2016 (EIRNS)—"Near-Zero Growth Happens Often in Slow-Motion U.S. Economy," read a headline in Bloomberg News this morning, which will not now or in the future be applied to the economy of China.
The occasion was tomorrow’s announcement by the Commerce Department of U.S. domestic product growth in the first quarter of 2016, which—though much massaged—will be "near-zero growth," as was the quarter before it. As the Federal Reserve put it in its monthly meeting statement, "Economic activity seems to have slowed in the United States."
As of March, capital investment by U.S. businesses has declined in 9 of the last 15 months, as well as over the past year. Capital investment means business orders for durable goods designated as capital goods, not including aircraft.
Productivity has been effectively at zero growth for five years.
Bloomberg also reported an Energy Information Administration (EIA) report on the devastating, roughly $100 billion losses of the U.S.-based, on-shore oil industry in 2015. According to the EIA, just 40 of the larger publicly traded U.S. oil producers had a combined $67 billion in net losses last year; "and the bleeding is continuing at least early this year for many."
The 18 U.S. oil companies that reported the biggest losses were saddled with $57 billion in long-term debt. These big losers also had an alarming average long-term debt-to-equity ratio of 99%, the EIA said. So the losses have also been blowing a hole in the Wall Street banks.
The zero-growth economy is also the "zero future" economy for young people. A striking study by the Pew Research Center, reported in the April 25 Wall Street Journal, found that "Millenials" (defined as those currently 18-34 years old, the largest age group in the population at 75 million) earn an average of 20% less, in real terms, than their parents did at the same ages, despite having more years of education. They have 40% more debt than their "Generation X" parents did around the turn of the century; less stable residence (45% living independently of their parents compared to 51% of their parents at the same ages; far less job security.