-and why another rate cut would be a “mistake.”
-Listen to AUDIO
”Tax rates are still low, monitory policy is not tight, consumer net worth is at a record high, at about 60 trillion dollars despite the woes of the housing market... Consumer cash flow is growing even faster than inflation because wages and salaries are growing even at a very rapid rate."And Stine explains:
"This is the opposite of what happened in the business expansion. Back in 2002-2005 we had a gangbuster period for profit; profits were going 'hand over fist.'"Meanwhile wages and salaries are growing rapidly; and what that means is that consumer purchasing power will remain strong, even though home prices are going down…and down...
Worker’s wages were growing (but only slightly.) Now we are seeing the opposite where profit margins are still high, but the growth rate of profits themselves have leveled off… (Basically, roughly 0 to 5%)