By Michael Pento

I'm sure if you're like me you wait with bated breath for April the 29th to occur. Why you ask, because that is the date the Bureau of Economic Analysis releases its Gross Domestic Product by industry accounts. The publication of this report shows the previous year’s percentage break down of the 96 categories in the calculation of G.D.P. A brief analysis of the report depicts the continuation of some troubling trends in the economy.

America's economy has devolved into one that depends on asset bubble creation in order to support G.D.P. growth. We no longer have an economy that is based on a healthy goods producing sector of the economy, but instead relies on the servicing of inflated assets like stocks and real estate in order to grow output.

Back in the late 1940's, we had an economy that was based on the production of tangible goods that could be traded and stored. The strong goods producing sector became the building blocks of this country’s wealth following the end of World War II. In 1947, manufacturing and agriculture accounted for 33.8% of G.D.P., while finance, insurance and real estate totaled just 10.4%. Fast forward to 2007, we see a completely different picture. Today, we find that manufacturing and agriculture account for only 12.9% of total output whereas finance, insurance and real estate account for a lofty 20.7% of G.D.P.

These economic imbalances have created serious repercussions. By not being able to consume our own production, we have become reliant on foreign sources for the tangible goods needed to run the economy. This has not only led to our $700 billion per year trade deficit, but has also contributed to our perpetually falling currency. And just as importantly, it has now caused our economy to be more and more dependent on inflated prices of assets to promote job growth. For example, during the height of the housing bubble, 40% of all jobs created during the years 2003-2006 were related to real estate.

Unfortunately, the ramifications of this situation are very clear. As the economy waits for the Fed to produce the next bubble, we should continue to experience below trend growth in G.D.P. and job creation. Investors who are betting on a US dollar rebound should realize that the current structure of the economy does not provide an environment that is conducive for currency appreciation. Look for the trends of a weak dollar and rising commodity prices to continue.