Submitted by Taps Coogan on the 29th of December 2017 to The Sounding Line.

Hoisington Investment Management’s Dr. Lacy Hunt recently had this to say about the current US economic expansion:

“If you calculate the average growth rate in the expansions since 1790, this is the slowest. It’s a long running expansion, but it’s the slowest and in the last ten years the household sector has fared very poorly. The rate of growth in real disposable household income per capita is only 0.9% per year and in the last 12 months we are up only 0.6% per year. So it’s a long running expansion but it’s been a poor expansion.”

“I think that the main element that has suppressed the growth is that the US economy is so heavily leveraged. We have too much public and private debt, and the debt unfortunately does not generate an income stream for the aggregate economy, and as a result of the prolonged higher indebtedness, which is on the verge of going much higher because of the problems in the governmental sector, the economy is now experiencing very poor demographics. We have a baby bust, a household creation bust, birth rate is the lowest since 1937, and this is exacerbating the problems, because we have too much of the wrong type of debt, and because we have too much of the wrong type of debt, the velocity of money is falling, and in fact, the velocity of money will be the lowest this year since 1949.”

“The whole world believes that the United States is experiencing large job gains and that really isn’t even questioned. But the rate of growth in payroll employment on a 12 month basis peaked at 2.4% in early 2015 and in the last 12 months we are down to 1.4%, but what is critical, if you look at just the expansions, don’t include the recessions since 1968, the average growth in employment in an expansion year was 1.9% and in the last 12 months we are half a percentage point under that, yet there is the perception that the employment gains are strong. This of course undermines the improvement of the standard of living.”

There is much much more to the interview, so enjoy it below:

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