3 mo moving average decelerating and now back to levels about where they were when the Fed expanded QE.

As expected, QE has failed again, and seems there’s no understanding that QE is in fact a tax that removes interest income from the economy.

Furthermore, the deceleration in jobs is consistent with the narrative that the FICA hikes and sequesters function to reduce aggregate demand, which, for all practical purposes, can only be overcome by an increased rate of private sector credit expansion, which the data tells me isn’t happening.

So after a weak Q4 due to cliff fears, a weak Q1 rebound to only 2.4% due to the tax increases, and now a weak and decelerating Q3 with GDP of about 1.5%, the 3 month average decelerates to only about 1.5% with a non trivial chance of going down from there.

In fact, if the govt deficit is too small and private sector credit expansion too weak to close the ‘spending gap’ it all goes into reverse until the automatic fiscal stabilizers increase the govt. deficit sufficiently to stabilize aggregate demand.

Just like in the Euro zone. And Japan, And the UK.