Tuesday, November 27, 2012

Household Net Worth vs. Personal Consumption Expenditures

Click to enlarge.

I'd love to ask a permabull what will be driving personal consumption expenditures exponentially higher from here. This chart would imply that it is important if we expect household net worth to grow.

Inflation? More debt? An ever dwindling supply of Americans not on food stamps?

Seriously, what is it?

This post inspired by Rob Dawg's comment found here.

Source Data:
St. Louis Fed: Custom Chart


Rob Dawg said...

Vhere iz mein overshoot?! Das iz not a proper graff without de OVERSHOOT!

Stagflationary Mark said...

Ja! Das Panzerschreck wird OVERSHOOT!

Stagflationary Mark said...

(Apologies to the Germans for going here, lol.)

Rob Dawg said...

I started it and I too apologize.

Imagine what household net worth would look like were we to tack on a pro rata share of the national debt. There's your overshoot.

Stagflationary Mark said...

Rob Dawg,

Hey, I like my WW2 war movies just as much as the next guy. ;)

I don't require a vivid imagination to picture the overshoot here.

In fact, one might even argue that in order to have a valid median trend line you pretty much are guaranteed to spend about as much time under it as you spend above it. That's just math talking.


Rob Dawg said...

Sadly one of the reasons for lack of overshoot is debt forgiveness that is dramatically increasing net worth for tens of millions.

Stagflationary Mark said...

Rob Dawg,

Over the long-term, I have a sinking suspicion...

That's it. I thought I was going to say more but I changed my mind, lol. Sigh.

Gallows humor.

Scott said...

Somebody ought to nail this chart to the door of the Federal Reserve offices in Washington.

mab said...


You want optimism, here you go.

Our glorious financial markets aren't just forward looking they're forward looting!

We clearly need another bubble to enable more looting. And mark my words, the best and brightest are working on it as we speak.

Stagflationary Mark said...


But... but... we NEED to get back on the red trend line! How are we going to do it without their help? Sigh.

Stagflationary Mark said...


Our glorious financial markets aren't just forward looking they're forward looting!

We're being spell bound!

The Adventures of Letter Man

In each segment, the narrator Joan Rivers, describes a simple, everyday situation. The villainous Spell Binder—dressed in a white coat and turban—would express disgust at what was going on. He would then use his trusty magic wand (stored beneath his turban) to change a key letter in the word (e.g., "custard" to "mustard").

Havoc would ensue as the result of Spell Binder's actions; for instance, in the above example, the people who were enjoying flavorful custard suddenly and unknowingly began eating red-hot mustard, causing them to turn red and burn from the mouth. Spell Binder would then revel in his fun.