Monday, April 25, 2016

April Update: We are at the bottom ...


From mine of 3 March 2016:
We are at the bottom now, ready to go up.

Graph #4: DPD with Trend out to 2030
We're right there right now. DPD is ready to go up right now.

Remember: When the downtrend turns and an uptrend begins the economy for a while is very, very good. This is not going to be your typical anemic recovery. This is going to be the full tilt, rapid output growth, rapid productivity growth, high performance boom.

I can't promise you it'll last long, because the level of debt is already very high. But it'll be a good one while it lasts.

Cheese, I gotta make a better graph!

//

There are a few people who might see things as I do...

... and a few headlines that suggest such things...

... but for the most part, projections look like this month's New York Fed Staff Forecast: RGDP growth slowing from 2½% in 2014 to 2% in 2015, holding at 2% in 2016, and slowing to 1¾% in 2017. Sluggishness on top of sluggishness.

They predict no improvement. They are assuming that the existing state of affairs will continue indefinitely. Not me. I have specific reasons to expect a change: I have my Debt-per-Dollar graph. I predict strong growth to develop over the next three years, and to last perhaps five years.

// see also: A Pictorial History: Private and Public Debt

5 comments:

The Arthurian said...

This is all seat-of-the-pants stuff.
I'm not calculating estimates of the future.
I'm just reading a graph (like tea leaves).

Note that if we get the boom I expect, they'll be revising potential GDP up instead of down.

jim said...

Hi Art,

I am curious why you are thinking that the debt per dollar ratio will change direction in the near future?

The Arthurian said...

Hi Jim. I guess I would have to say because that's how the graph looks to me. It doesn't go down and stay down. It goes down, turns, and goes up again. And it is turning now.

It's a big deal because after the 1920 bottom and the 1945 bottom and the 1993 bottom, growth was vigorous for a while. So I expect vigor again this time.

jim said...

It looks like its going down to me.

Back about 5 years ago it looked like it was starting to turn and then it headed down faster than before.

https://research.stlouisfed.org/fred2/graph/?g=4hBe

The Arthurian said...

I could be wrong. We will see.