The Recession Doldrums

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The Wall Street Journal asks a question today:

Can Rally Run Without Revenue?
Investors Wonder Whether Profits Based on Cost Cutting Can Long Endure

No, they can’t.  Beyond the very shortest of short terms, you need rising revenue to generate rising earnings, and for that you need higher consumer spending.

But there’s no sign of that.  This isn’t an ordinary inventory cycle recession, which goes away when inventories tighten back up, or a Fed-induced inflation-fighting recession, which goes away when the Fed eases up on interest rates.  It’s a massive deleveraging recession, and it won’t go away until consumers and businesses pay down their crushing debt loads and start spending money again.

But how?  There are only a few ways for consumers to spend more money, and none of them are anywhere on the horizon.  Wages aren’t going up, employment isn’t going up, the glory days of credit card debt and home equity loans are over, and no one is drawing down their savings to buy bedroom sets these days.  Just the opposite, in fact.

So with consumers actively reducing their consumption in order to pay off debt, what’s going to keep this recovery going?  A few hundred billion dollars in stimulus money?  Not likely.  Unfortunately, with no second stimulus likely to get serious consideration, we’re stuck in the doldrums until deleveraging has run its course.  That’s probably going to take another couple of years.

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THE TRUTH IS...

what drives Mother Jones' team of 50-plus journalists. The truth is powerful, as evidenced by how hard those with something to hide, or profit to gain, seek to discredit it. The truth, stated boldly and reported meticulously, is what draws so many readers to Mother Jones.

And the truth is, going into the final 4 days of the year we still needed to raise $TK to hit our $350,000 goal and start 2021 on track. It's nerve-wracking, wondering if the big spike we normally see at the end of December is going to be another thing that doesn't go as planned in 2020, or worse, if, now that Donald Trump is set to leave the White House (for longer than a taxpayer-funded golf trip to a property he owns), folks might be pulling back from fighting for the truth and a democracy and think the hard work is done.

It's not, and if you can right now, please consider a year-end donation to support our team's fearless nonprofit journalism so we can close that big fundraising gap and finish the year strong, ready for all that's ahead in 2021. Whether you can give $5 or $500, it all matters in keeping us charging hard, and we'd be grateful.

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