The economy looks good today, but the next debt crisis is on the horizon


From Fortune:
In his first testimony to Congress this week, new Federal Reserve Chair Jerome Powell argued that the U.S. economic outlook is positive. He cited “the robust job market” boosting consumer incomes and spending, strong growth in other countries helping U.S. exports, and the “stimulative” recent U.S. tax reform.
Not so fast. The recent return of volatility to markets should remind us we won’t be able to call the next economic crisis a “black swan” when it hits down the road, because the elements are already in plain sight: a dangerous cocktail of rising consumer, corporate, and sovereign debt scheduled for refinancing; rising interest rates; and increasing global competition for investors’ attention.
We can’t ignore the enduring problem of unemployment and underemployment. While the Bureau of Labor Statistics lists the unemployment rate at 4.1%—a 17-year low—the seasonally adjusted U6 unemployment rate, which takes into account eligible workers who can’t find full-time jobs and those who have given up trying altogether, stands at 8.2%. The fact is that automation and other technological innovations are accelerating job displacement, reducing costs, and increasing corporate margins and profits. This benefits investors with the liquidity available to participate in financial markets, but certainly not average families living from paycheck to paycheck, or without a paycheck at all…
Continue reading at Fortune

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