Famed short-seller (famed because he makes a lot of money shorting stocks, even in generally rising markets) casts a gimlet eye on the US economy in an interview with Lynn Parramore. From Parramore at ineteconomics.com:
The famed short-seller offers a mid-2017 reality check for “fake fiscal news,” economic pipe dreams, and “portents of even worse things”
Since the election of Donald Trump, the stock market has soared and many pundits have noted positive economic trends in the US. Jim Chanos of Kynikos Associates, known for his financial prescience, is less sanguine. He sat down with INET’s Lynn Parramore to discuss the underlying components of the economy, in which he finds several areas of concern. Chanos is a member of INET’s Global Partners Council.
Lynn Parramore: Let’s talk about perceptions of the U.S. economy. You’ve pointed out that surveys asking how people feel about the economy show optimism, while actual hard numbers look disappointing. What do you make of this gap?
Jim Chanos: It’s intriguing that people are reporting they’re feeling better, particularly in the corporate sector, but even among consumers. People say they feel good about the economy and yet they apparently don’t have any money at the end of every month to keep spending.
We’re seeing weak consumer spending numbers in both auto and housing, which are big drivers of the economy. With unemployment so low and the expansion where it is, these figures should be better than they are. There are portents of even worse things when you look at state and federal tax receipts, which are down, and other leading indicators.
It could all just be a soft spot in an ongoing expansion — time will tell. But the narrative we were told is that animal spirits would take us to the next level of economic activity. That clearly is not happening in mid-2017. We’re 8 years into an economic expansion, and economists say that the modern U.S. economy has never gone more than 10 years without a recession. So as recoveries go we are well into it.
People have bought their cars and remodeled their houses and done a lot of things that one does in an economic recovery. I think incremental spending [spending based on increased disposable income] is going to be harder and harder to come by as time goes on.
To continue reading: Jim Chanos: U.S. Economy is Worse Than You Think