We're Going To Need A Bigger Helicopter: Goldman Sachs Says Long-Term Growth Prospects In US Are Deteriorating
The storyline of a global recovery following almost a decade of historically unmatched central bank intervention remains grounded in hubris.
The real economic impact of the past nine years has been irreversibly detrimental. Market participants have become so focused on the short-term, the next Fed rate hike, the next European policy measure designed to test the EU experiment, and the desire to buyback as many shares as possible to milk the P/E metric, that the longer-term impact of the actions of a few central bank leaders has gone by without any serious concern.
As we await the next 25bps hike from the FOMC here in the US, Goldman Sachs decided to offer up some longer-dated reviews of just where the country stands in terms of growth.
When it comes to U.S. GDP, Goldman's team lead by Peter Oppenheimer noted that U.S. GDP growth has been continuously revised lower:
Next up, and is this one a doozy, the recovery everyone stands on top of mountains shouting about isn't the Ferrari we're all told it is; It's more akin to the power behind a 4-banger rice burner as the 2007 recovery growth path lags those of all prior recoveries:
We mentioned the lack of a recovery back in September 2015 in an effort to egg on the bulls who honestly believed a 25bps raise would either destroy the market or mark a Fed victory.
The data just gets worse as we go. Looking at the growth of long-term implied dividend growth yields a barren wasteland. In the US, that growth is resting on the lows last seen in, guess what year? 2008.
In Europe, we can forget about earnings growth. The number hasn't been this bad since, well, ever:
The dramatic decline in earnings growth, even in the face of massive corporate buybacks, stretches well beyond Europe. The entire globe is dropping the ball, much like the Buffalo Bills from 1990 to 1993:
There's nothing more to say than what we have witnessed since 2008 has done nothing to address the inherent problems with our financial system.
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