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Despite recent reports of improvements in unemployment numbers and record corporate earnings growth, the state of the U.S. economy and financial markets are not what they may seem.

Much of this data has been due to the smoke and mirrors trickery of the government, including the use of the discouraged worker designation, record low corporate taxes, loose credit policies of the Federal Reserve, and overseas expansions by corporations, which have provided inexpensive goods to credit-happy Americans. However, this illusion of short-term gains has come at the expense of record trade deficits and a wave of job losses for Americans.

But now with credit tightening and home equity loans depleted, soon American consumers with falter due to the delayed effects of lack of real job growth, declining job quality and employee benefits, and a negative savings rate, all in the face of the repricing of up to $3 trillion of outstanding residential mortgage debt in 2006 alone, as well as rising credit card interest payments.

Current State of the Economy