Deleveraging Is a Drag

By A. Gary Shilling – I’ve been forecasting 2 percent average real growth for the duration of deleveraging because of several specific drags on economic growth.

First and foremost is deleveraging. This is manifest not only in ongoing debt reduction but also in the shift by consumers from a two-decade-long borrowing and spending binge to a saving spree.

This shift by U.S. consumers will slow global growth significantly. With few exceptions, foreign countries are net exporters, while the U.S. is the net importer of the goods and services for which foreign countries have no other ready markets. more>



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