Is Slow Growth Sustainable?

The unemployment rate inches back up close to 8%, GDP sinks into negative territory for the fourth quarter 2012, and the stock market heads for new highs as its price-earnings ratio stands at a rather lofty 22. Huh? Are we fooling ourselves again?

The February labor market report showed about 160,000 new jobs added last month very much in line with the recent, plodding-along monthly averages, which can barely keep pace with new entrants into the labor force. It’s more of the same slow growth scenario, which has not yet registered the impact of recent tax increases on consumer spending let alone the federal government spending cuts expected by spring —will it be sequestration or more likely some form of sequestration lite? Congress, of course, has not figured that out yet and neither party wants to face the reality of how many jobs will be lost as a result, hot political rhetoric aside.