The inflation at 2 % with slow economy growth shows stagnation whether we like it or not . The petrol price at retail level is raising to confirm this as american citizens are highly sensible to petrol price because petrol is in the roots of their consumption needs .
Used capacity remains below 80 % and although budget deficit is closing the gap probably because of recent tax moves which impact need yet be fully perceived , the external current account continues to show the need to improve competitiveness .
No surprise that the dolar is gaining ground in a move to keep hold of petrol prices and to compensate for the ailing current account deficit ( external trade ) it is good to see that in the TICs ( capital flows ) the inflows are substantially dominating and growing to quench fiscal disagreement effects between democrats and conservatives
But at the end of the day the same question is on the table . For how long can the US economy be based on external financing ?
Remember that the private and corporate debt is much higher than the economy may bear, specially as unemployment shows a tremendous loss of jobs in the selective manufacturing sectors responsable for the creation of richness which is having a strong influence in the loss of purchase capacity as well as in the income tax revenue .
The US probably needs to review traditional tax structure to favor development of added value ventures and companies and the recovery of a middle class earning salaries between 70.000 and 120.000 $ while GINI indicator is reduced from the current figure of 0.46 .
It does not mean reducing or increasing taxes but establishing a more selective distribution of taxes in sales, income and corporate profit . ( Making money through speculation is not as healthy to real economy than making money through long term added value investments )
Brahmason
Brahmason@gmail.com
