On Tuesday, the Commerce Department released a fantastic estimate: In the third quarter of 2014, U.S. GDP grew at a rate of 5 percent, the fastest it's grown since 2003.
But things might not be all they're cracked up to be.
"Overall the economy is quite weak," Peter Schiff, CEO and chief global strategist at Euro Pacific Capital Inc., told TheBlaze this week.
Peter Schiff. (Image via Twitter)
The fact that the Federal Reserve has kept interest rates near zero, where they've been since the onset of the recession in 2007-08, speaks volumes about what the nation's financial leadership really thinks about the economy's strength, Schiff said.
"If this economy really is so strong, why haven’t they raised rates?" Schiff questioned. "Why do they have to be patient? What are they afraid of?"
He said that the third quarter GDP figures, "however the stats are doctored up," belie the true fragility of the U.S. economy — and its dependence on the Federal Reserve's largesse.
Quantitative easing has artificially stimulated the economy for the past four years, and $3 trillion later the bond-buying program was ended with inconclusive results.
"Next year might be a recession without [more quantitative easing]," Schiff said.
It's a recession that needs to happen, in Schiff's view.
"Let the recession happen, raise rates," was his prescription. "It’s gonna be a bloodbath but it’s got to happen."
Easy monetary policies aren't a permanent fix, Schiff said, but merely "delay the Day of Reckoning" — meaning that day "will just be worse when it comes."
Schiff pointed to a slew of economic indicators that demonstrate relative weakness in the economy: durable goods orders slacking off, a weak purchasing managers index and a weak holiday shopping season (though last-minute shopping may have helped boost retailers' bottom line).
"The average consumer has way too much debt and household net worth has declined," Schiff said. "Real wages are lower today than they were five years ago. I think people are overestimating the shape of the consumer and his ability to spend."
Schiff also pointed to less-noticed indicators, like "the 5 percent decline in movie box office sales" to back up his point: "It's all a bubble masquerading as a recovery."
In this Nov. 28, 2014 file photo, Target shoppers Kelly Foley, left, Debbie Winslow, center, and Ann Rich use a smartphone to look at a competitor's prices while shopping shortly after midnight on Black Friday in South Portland, Maine. After a freezing winter put a cold stop to buying and selling, the U.S. economy has posted its best six months since 2003 — but some analysts aren't convinced the economy is really that strong. (AP Photo/Robert F. Bukaty, File)
As global oil prices fall, many of America's well-paying jobs will evaporate, Schiff predicted, and the employment situation will get dire.
"Young people can’t get part-time jobs because their grandparents have those jobs," Schiff said.
Schiff's prediction: "Companies bought too much [preparing for the holiday season] and they’re not gonna be buying more. There's going to be a lot of layoffs come January."
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