Thursday, June 07, 2007

Lets Hope I am missing Something

This Post is one of those dazzlers, defined as the fact I agree with the full assessment, simply disagree with the Conclusion. Too many long-term generic factors exist to give Us a US economy producing a 3% Growth rate. Removal of Nominal expectations from economic data must suggest the American economy is entering a slow deterioration which will last until the full retirement of the Baby-Boomers. Everything can look Good, but the underpinnings sit on some fundamental Shift sand.

The Housing market cannot really Recover, due to the fundamental fact that Baby-Boomers are starting to sell Work outlet Housing for Retirement Housing. This element has fueled the Construction Boom of late Years, and will continue to do so; but only at the Cost of leaving excess Housing on the Market. Business is already making the Shift to Second-Job re-employment of Baby Boomers, but these are all less-than-efficient Production facilities of higher Pay for less Effort. Retailers already face a lessened Profit Margin from necessary Stock of Products dovetailed for an Ageing Consumer, and trying to gouge an excessive Profit from Youth Products to equalize Operating revenues. All of the Above, plus much More, holds little hope for an advancing Economy.

The real harm to the current Economy may come in the form of higher Energy prices. The American economy has been gearing up for Years to absorb the accrued Savings of the retiring Baby Boomers. The Problem enters that this Gearing has been within the very heavy Energy consumption-use Products of RTVs, high-Rent Campgrounds and Retirement Villages, wintering Resort facilities, and high-energy usage Home Products. Property values has been driven too high by venting of high Construction pricing through Energy pricing, and Product supply for the furnishing of these Properties is already well-advanced. Retirees buy high-Quality Products of long life, and their Product Replacement rates are much slower than the Working Population. The growing Consumer market is mostly composed of Immigrants, who spend less than the Norm of the Working Population, because of lower Wages and greater Rental Costs; despite the massive extension of Consumer Credit. I can’t see any alteration of these base Fundamentals, and they seem to dictate slower growth, or erosion reduction. lgl

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