Friday, November 25, 2016

It was all over but the funeral when the red went above the blue


Graph #1: Growth of Financial (red) and NonFinancial (blue) Business Debt, relative to GDP
https://fred.stlouisfed.org/graph/?g=bRAv


That's when it was all over. But when did the trouble start? The next graph shows the blue relative to the red:

Graph #2
The blue line here is the blue (from Graph #1) relative to the red (from Graph #1).
The red line here is a Hodrick-Prescott, showing decline since the beginning.
If you look again, you might see an uptrend in the early 1960s which appears in the Hodrick-Prescott as a brief flattening. If I started the H-P in 1960 it would start with an uptrend.

Graph #3
The ratio doesn't always have to trend downward.
The early 1960s were pretty good, by the way.

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