NEW YORK ( TheStreet) -- In April, the IMF lowered growth estimates for every industrial economy except Japan, where Abenomics (essentially, monetary and fiscal policies even more stimulative than those of the U.S.) was being praised as a godsend after more than 20 years of deflation. Since then, markets in Japan have been having second thoughts as to the effectiveness of Abenomics, and, as of June 21, the Nikkei had fallen by more than 15% from its peak on May 22. Europe remains in severe recession, and the BRICS (Brazil, Russia, India, China and South Africa) are experiencing significantly slower growth.
There are growing job openings and a mismatch of needed skills, falling new weekly claims for unemployment insurance and rising voluntary quits. Besides the tight labor market, for the past five years, firms have been unwilling to reinvest in themselves, choosing instead to hoard large volumes of cash. As a result, capacity issues could constrain the rate of expansion of real physical output. David Rosenberg, of Gluskin-Sheff, indicates that he believes that noninflationary potential economic growth in the U.S. is between 1% and 2%, as opposed to the 4% view held by those who control economic policies. If correct, the U.S. is currently at or even above its noninflationary growth rate.