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The Wasp
Mr Raccoon

Recovery? What recovery. Even more reasons why the US really is buggered.

Whilst all is well with the economies of the world according to the MSM, actual data inconveniently suggests otherwise.

From The Fiscal Times we have this :

For the first time since the Great Depression, households are receiving more income from the government than they are paying the government in taxes. The combination of more cash from various programs, called transfer payments, and lower taxes has been a double-barreled boost to consumers’ buying power, while also blowing a hole in the deficit. The 1930s offer a cautionary tale: The only other time government income support exceeded taxes paid was from 1931 to 1936. That trend reversed in 1936, after a recovery was underway, and the economy fell back into a second leg of recession during 1937 and 1938.

As then, the pattern now reflects two factors: the severe depth of the 2007-09 recession and the massive fiscal policy response to it. The recession cut deeply into tax payments as more people lost their jobs, and it boosted payments for so-called automatic stabilizers, such as unemployment insurance, that ramp up payments as the economy turns down. Plus, policy actions, including the Recovery Act, boosted payments to households by expanding and extending jobless benefits and creating other income subsidies while extending the Bush-era tax cuts and adding new reductions in income and payroll taxes.

As is always said – a picture speaks a thousand words :

As I said in the title – what recovery?

When much more is being paid out than is coming in and with the balance being made up by the Federal Reserve actively doing what they said they wouldn’t (buying government bonds) it can only be a matter of time before the shit hits the fan.

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