Wednesday, November 22, 2017

Hey Tom

Remember when I said

I predict a boom of "golden age" vigor, beginning in 2016 and lasting eight to ten years. It has already begun. In two years everyone will be predicting it.

Tom, you said

Art goes out on the limb.

Remember? That was 19, almost 20 months ago. Have you noticed that the mood is more upbeat now? Rather than predicting recession, people seem to think we can get 3% growth.

We'll beat 3%.


Philip said...

I think it's instructive to look at the graph of the personal saving rate.

We are getting close to the point where the crash occurred in 2007. I wouldn't be surprised to see the next one happening within a year. It all depends of course on the rate of growth of money supply. I am referring to the measure I have constructed. Currently, the growth rate is around 14%. At this rate nothing catastrophic will happen. In October 2015 it had fallen to 1% but then rose steadily thereafter.

The Arthurian said...

Philip, I don't look at personal saving much because I have not sorted out all the series FRED offers on saving.

I looked at PSAVERT just now and it definitely is low. And falling since before 2016. But if people are not saving, they are spending... spending or paying off debt.

If I take 100 [percent of income] and subtract the saving rate percentage, and subtract the debt service percentage, I get a line that is trending upward pretty consistently: household aggregate demand is going up.

If I take that line and factor in labor share, the numbers are huge but the line shows increase since mid-2012, and looks reasonable recently. I'd be surprised if we get another crash.

Policy could create a crash, of course. I also see no strong hings of recession.

I like your money measure a lot. Got a link or two that lays out your calculation? I'm still foggy on that.

The Arthurian said...

... no strong HINTS of recession.