Summary
-
In the United States, the contribution that households will make to economic recovery will be limited by their need to deleverage. Is the financial situation of businesses also a factor likely to dampen recovery?
-
After the 2001 recession, massive job losses continued for several more quarters into the recovery as businesses faced particularly depressed profit margins. As the situation is entirely different at the start of this upturn, there is no reason for immense layoffs to persist.
-
Internally generated funds suffice to finance an increase in investment spending.
-
The indebtedness of non-financial corporations currently stands at no more than its average level for the past 40 years.
-
Consequently, the financial situation of businesses will in no way be an obstacle to economic recovery.
