The Recovery (?) That Isn’t

What defines a recovery? Generally, it is tied to two drivers. Capital formation, and Personal Income.  Capital formation requires both the expansion of existing businesses, and, more importantly, the formation of new ones. Businesses and budding entrepreneurs see a set of rising opportunities, and act on them to raise capital to move forward.

When businesses expand, or are formed anew, Individuals benefit. New jobs are created, and old jobs are protected to defend the existing business. In total, wages paid rise in the populace.

(I kind of apologize for the Econ Lesson – Econ 103 – but I felt that some definition would help.)

So then, what about this “recovery”. Hmm. There is virtually no new net capital formation. Businesses are sitting on their hands (as well as cash). Entrepreneurs are on the sidelines. Business formation is at an extremely low level Why? Uncertainty. Nobody knows what is going to happen to taxes, and everyone is scared to death of the almost logarithmic expansion of regulations that has happened in the current administration.

So, what does that mean for the second recovery phase. personal income? Not Good.

The Weekly Standard has the numbers, which are rather depressing. Read their article here.


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