Stephen Roach on America’s False Dawn

Stephen Roach, senior fellow at Yale University and former Chairman of Morgan Stanley Asia, published an enlightening commentary on Project Syndicate yesterday. Roach explains why the tepid improvement in GDP does not necessarily herald a full-on US recovery. He also examines at length the balance-sheet recession of the average American consumer that continues to stifle the economy.

“Financial markets and the so-called Davos consensus are in broad agreement that something close to a classic cyclical revival may finally be at hand for the US. But is it?

At first blush, the celebration seems warranted. Growth in real GDP appears to have averaged close to 4% in the second half of 2013, nearly double the 2.2% pace of the preceding four years. The unemployment rate has finally fallen below the 7% threshold. And the Federal Reserve has validated this seemingly uplifting scenario by starting to taper its purchases of long-term assets.

But my advice is to keep the champagne on ice.”

Read the Full Commentary Here

stephen s roach

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