US has an aging population. The world is undergoing massive labor cost arbitrage. Mandatory welfare state is crowding out all available savings, therefore productive investment is getting lower by the day. Corporate cash cows allocate more funds towards share repurchasing than towards investing in free cash flow drivers. Overall debt is beyond repayment as debt growth rate is several orders of magnitude greater than GDP growth rate.



All these are structural headwinds. Irrespective who is President of the United States.



If such headwinds were unique to the US, it would be safe to say that a major Depression would be built into the cake. However, the same headwinds apply to most large economies.



The main difference is that the US is still granted reserve currency status. That enables the country to get into gargantuan deficits, financed by foreigners. The author complains about such a historically tiny growth rate. Think of the case the petrodollar lost its reserve currency status, and you would be writing about a long recession, if not an outright depression.



If the dollar lost its reserve currency status, the Federal Reserve would be totally useless.



But until then, the real dual mandate of the Federal Reserve is to make the up cycle last as much as possible (whatever the imbalances built into the cake), and to make the down cycle the lesser deep.



Read the Fed tape for the foreseeable future: less than 2% inflation and moderate growth rate. The dollar has been put on a downward spiral. Good for corporate results reported in US dollars.



But the greater effect is somewhere else. A falling dollar means unlimited emerging markets financing. This will parallel Germany in the early 2000's, inducing a credit bubble in the South, to its sole benefit.



Maybe the weakening dollar aims at creating a big financing bubble in emerging markets, primarily to buy US made goods... That could keep recessionary forces at bay for several additional quarters.



Call me a fool but I bet Yellen main objective is to enter history books as the one and only recession-free, Fed Chair.



Corporate America 's earnings increase when Congress is paralyzed. That can help Trump maintain his electoral base intact, however countless unfulfilled promises.

