Debt data shows that total credit jumped644.9 billion in the first quarter while economic growth was just 64.7 billionas measured by GDP or Gross Domestic Product. Looked at another way and it took about $10 in new debt to produce $1 innew economic activity, a shocking and clearly unsustainable ratio. The historical reference is that a borrowedDollar produced about $8 in new economic activity so the ratio used to be 1 to 8 now it is 10 to 1.
Data on Federal and State Tax receipts show that theyplunged in the 1st quarter to levels usually associated with thestart of recessions, based on data from Evercore. Though I have said this before it is becomingever more difficult to reconcile the incoming data as it is increasingly contradictoryand from a historical perspective the economy and business cycle should both befalling apart in dramatic fashion already.
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