28 Aug 2015

russ-koesterich

 

Since emerging from the financial crisis, U.S. economic performance has consistently disappointed. This is particularly apparent when you consider the historical pattern of economic recoveries: Typically, the strength of the rebound is in proportion to the severity of the recession. Several factors are to blame: demographics, fiscal drag and tepid capital spending. Adding to the list of culprits is weak household consumption. Despite a material improvement in the labor market, a surge in household wealth and a dramatic drop in gasoline prices, U.S. consumers are hesitant with their spending.

There are several explanations for this phenomenon, ranging from the longer term to the more cyclical. However, the slowdown in consumption predates the crisis, suggesting the importance of the longer-term factors, such as the secular stagnation in wages, particularly for middle-income families, as well as rising savings and slower household credit growth. Although the savings rate has rebounded from last decade’s lows, relative to history, the U.S. savings rate is still low. This is particularly problematic as households are now facing a longer retirement, further complicated by ultralow interest rates.

 

 

PDF

Read Full Article

 

 

 

 

 

 

 

Issued in Hong Kong by BlackRock Asset Management North Asia Limited. This material has not been reviewed by the Securities and Futures Commission. Investment involves risks. Past performance is not a guide to future performance. There is no guarantee that any forecasts made will come to pass. Reliance upon information in this material is at the sole discretion of the reader. This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any securities or to adopt any investment strategy. Any opinions contained herein, which reflect our judgment at this date, and may change as subsequent conditions vary. The information and opinions contained in this material are derived from proprietary and non-proprietary sources deemed by BlackRock to be reliable, are not necessarily all-inclusive and are not guaranteed as to accuracy. This material is for informational purposes only and does not constitute an offer or invitation to anyone to invest in any BlackRock fund and has not been prepared in connection with any such offer. Any research in this material has been procured and may have been acted on by BlackRock for its own purpose. The results of such research are being made available only incidentally. BlackRock® are registered trademarks of BlackRock, Inc. All other trademarks, servicemarks or registered trademarks are the property of their respective owners. ©2015 BlackRock Inc. All rights reserved.