Saturday, November 5, 2016

About the vigor created by our next President

Reblogged from August

"The underlying reality of low growth", Neil Irwin says, "will haunt whoever wins the White House in November". I don't think so. I expect vigor, no matter who wins the White House in November.

I think it would be pretty ironic if Hillary Clinton gets elected. Because what I'm looking at amounts to vigor starting about a year into the first term of the next U.S. President. If Hillary is elected, we will be hearing stories that it takes a Clinton to create economic vigor. But Bill Clinton had no more to do with the good economy of the 1990s than Hillary does with the good economy of 2018-2024.

It would be more accurate to say that the changes which created the good years of the latter 1990s happened mostly during the Reagan and H.W. Bush years; and that the changes which will create the good years to come happened mostly during the Obama years.

For the record, the vigor of the 1990s was made possible by a big drop in debt growth (1985-1991) combined with a big increase in spending money (1990-1994). The debt-per-dollar ratio shows this as a decline (1990-1994). That decline was followed by unusually rapid increase (1995-2000). This increase was the source of the funds that made vigorous growth possible in the latter 1990s.

The changes are indicated in red on the graphs below:

Graph #1: The Growth of Total Debt
Graph #2: The Growth of Spending Money
Graph #3: The Debt-per-Dollar Ratio

You can see the same effects in the graph of household debt service.

Graph #4: Household Debt Service

The stage has already been set for the vigor that will be attributed to our next President.

4 comments:

The Arthurian said...

"If Hillary is elected, we will be hearing stories that it takes a Clinton to create economic vigor."

And I heard something like that from President Obama, stumping for Hillary, on the news tonight.

jim said...

Hi Art,
If Trump gets elected there will be the same stories...
Probably, we will be better off if Hillary get the undeserved credit

The Arthurian said...

BLS:
"Productivity and Costs, Third Quarter 2016, Revised
Transmission of material in this release is embargoed until 8:30 a.m. (EST) Tuesday, December 6, 2016
...
PRODUCTIVITY AND COSTS
Third Quarter 2016, Revised
Nonfarm business sector labor productivity increased at a 3.1-percent annual
rate during the third quarter of 2016
, the U.S. Bureau of Labor Statistics
reported today..."

It's going up.

The Arthurian said...

dw.com: Robust economy likely to nudge US Fed to hike rates

"Positive economic conditions, marked by falling unemployment and accelerating inflation, have increased the odds of the US Federal Reserve raising its benchmark interest rates at its ongoing policy meeting."

It's going up.