The federal government has attempted to alleviate this problem through their $787 billion stimulus package. However, even if one dollar of output is generated from each stimulus dollar, by the time total output reached the levels it was at right before the recession, President Barack Obama will be nearing the end of his first term.
To make the situation even worse, many fear that nearly all nations around the globe are suffering from idle capacity. It is not only American companies that are dwindling down production and cutting prices to reach economic supply and demand equilibrium.
So when will all of this stop? That is the trillion dollar question and no one really knows. The future is somewhat of a mystery and all we know is that ambiguity lies ahead. For this reason, from an investor’s perspective, the buy and hold strategy makes no sense and we suggest you watch the trendlines to spot where recoveries are taking place.
Kevin Grewal contributed to this article.