Peak Consumption

By: Gordon Long | Mon, May 6, 2013
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With Co-Host Charles Hugh Smith

27 Minutes, 26 Slides

A flawed GDP formula currently hides the problems in the US economy associated with swollen and unrealistic levels of consumption. The fact that Investment has fallen and net exports are chronically negative has been recently 'papered' over by increased government expenditures. These distortions will soon be brought to the fore since a 71% consumptions level in the US can not longer be sustained and the cracks are showing.

Growth in core retail sales has slowed


How Did It Get To Such A Level?

Most developed countries have consumption levels approximating 50 - 55%. The US, reflective of a high standard of living, has sustained high levels of consumption for the last 30 years. This was based on:

  1. High Levels of Employment,
  2. A Strong Middle Class,
  3. Years of strong Domestic and Foreign Capital Investment,
  4. Low Levels of Per Capita Poverty,
  5. Industrial Strength resulting in Global Export Dominance,
  6. Public Policy that supported Private Investment and Business,
  7. Low Tax Levels.

Shrinking Disposable Income


Why a 70% Consumption Can't Be Sustained

The 70% Consumption level has peaked due to:

  1. Crushing Post Secondary Education Costs,
  2. The Shift from Defined Benefits Programs with Contributor Benefit Programs,
  3. Elevated Costs for Housing,
  4. Job shortages,
  5. 47.8M Americans or 15% of population on Food Stamps and 50M Americans below the poverty line,
  6. 110M Americans are on Welfare Programs (88M) or work for 'Government' while 110M working age Americans are not working (students etc.) and the remaining 95M are younger than 18 or over 65.

Peak-3


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Gordon Long

Author: Gordon Long

Gordon T. Long
Publisher - LONGWave

Gordon T. Long

Gordon T. Long has been publically offering his financial and economic writing since 2010, following a career internationally in technology, senior management & investment finance. He brings a unique perspective to macroeconomic analysis because of his broad background, which is not typically found or available to the public.

Mr. Long was a senior group executive with IBM and Motorola for over 20 years. Earlier in his career he was involved in Sales, Marketing & Service of computing and network communications solutions across an extensive array of industries. He subsequently held senior positions, which included: VP & General Manager, Four Phase (Canada); Vice President Operations, Motorola (MISL - Canada); Vice President Engineering & Officer, Motorola (Codex - USA).

After a career with Fortune 500 corporations, he became a senior officer of Cambex, a highly successful high tech start-up and public company (Nasdaq: CBEX), where he spearheaded global expansion as Executive VP & General Manager.

In 1995, he founded the LCM Groupe in Paris, France to specialize in the rapidly emerging Internet Venture Capital and Private Equity industry. A focus in the technology research field of Chaos Theory and Mandelbrot Generators lead in the early 2000's to the development of advanced Technical Analysis and Market Analytics platforms. The LCM Groupe is a recognized source for the most advanced technical analysis techniques employed in market trading pattern recognition.

Mr. Long presently resides in Boston, Massachusetts, continuing the expansion of the LCM Groupe's International Private Equity opportunities in addition to their core financial market trading platforms expertise. GordonTLong.com is a wholly owned operating unit of the LCM Groupe.

Gordon T. Long is a graduate Engineer, University of Waterloo (Canada) in Thermodynamics-Fluid Mechanics (Aerodynamics). On graduation from an intensive 5 year specialized Co-operative Engineering program he pursued graduate business studies at the prestigious Ivy Business School, University of Western Ontario (Canada) on a Northern & Central Gas Corporation Scholarship. He was subsequently selected to attend advanced one year training with the IBM Corporation in New York prior to starting his career with IBM.

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