Friday, February 28, 2014

Man the Lifeboats?

The following chart shows the annual change in annual real disposable personal income per capita.

Click to enlarge.

As seen in the chart, we have never successfully avoided a recession when this growth rate falls below 0%.

The growth rate is currently 0.0% and falling.

May 18, 2012
Recession Prediction

I'm going to predict the next recession will hit on or before October 2014.

I see little reason to change my opinion. This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart


Troy said...

Disposable Income The amount of money that households have available for spending and saving after income taxes have been accounted for.

Looks like we need more tax cuts!

Like I say, having lived in Japan in the 1990s, I've seen this movie before!

Troy said...

As for the recession prediction, 2014 is the stepping stone to 2016, and I think the House majority is perfectly fine with seeing the heat turned up a bit, socio-economically.

And by heat I mean pain.

Stagflationary Mark said...


In theory, real disposable personal income per capita could move higher in 2014. We haven't technically fallen below 0% yet (it is ever so slightly positive).

In theory, we could dip negative and still avoid a recession. That's possible too.

On the other hand, the 17 year trend is down and the trend over the last few years is down (thanks to ZIRP!).

I say man the lifeboats. Even if the ship doesn't sink, then no harm done. One can always just get back out and enjoy all this cruise ship has to offer (norovirus notwithstanding).

Anonymous said...

Hi Mark - Could the situation be worse than indicated because a higher percentage of real income is going to very high income individuals making the annual change worse substantially below zero for the majority, i.e., most are in the recessionary zone.

mab said...

Dividend and capital gains tax changes that took effect Jan 2013 distort the data a bit.

That said, income growth is pathetic.

And expecting people to start borrowing their way back to prosperity is absurd.

The majority never left recession.

Another vertical gray stripe here wouldn't surprise me at all.

Stagflationary Mark said...


Yes. That's a good point that's worth repeating.

It could definitely be worse than indicated due to rising income inequality, which is true of almost all the ugly charts I post. Sigh.

And on that note, I see that Sbarro is preparing for bankruptcy again "as mall traffic slows."

Stagflationary Mark said...


And expecting people to start borrowing their way back to prosperity is absurd.

Well, if you word it that way, sure.

Sounds better if it's called monetarily necessary lifeblood transfusions.

Ah, who am I kidding? If a doctor told me that in the emergency room I'm fairly sure my blood pressure would rise dangerously, lol. Sigh. Never mind.

mab said...

necessary lifeblood transfusions.

Blood banks! Zombie banks! Vampire squids!

Dawn of the Fed? Night of the living Fed?

Just great, now I won't be able to sleep.

Stagflationary Mark said...


Must Choose One:

1. Stake to the heart.
2. Steak for the TARP!

Our vampiric leaders spent many milliseconds agonizing over the difficult decision.

mab said...

Must Choose One:

I feel like I'm in Highlander!

There can only be Juan.....or something.

Rob Dawg said...

Medical insurance is consided paid out of disposable income. What does that chart look like when it is disposable income minus health care expenses?

Troy said...

shows per-capita health expense is up $3,000 since 2002.

It doubled 1980-1986, 1986-1998, 1998-2013

But rising medical costs do factor back into what a 'real' dollar is, or is not.

dearieme said...

17 years? That's approximately the same time for which Global Warming has mysteriously vanished. Vot can it mean?

Stagflationary Mark said...

Rob Dawg & Troy,

As more money is spent on healthcare insurance and less will be spent at Sears and JC Penney.

We probably didn't want malls to survive anyway. Best we just stay home and play video games and binge watch Netflix.

In all seriousness, I just described myself. As of January, I now have health insurance. My last discretionary purchase was made at I've been to a mall once in the past year (and the only purchase was in the food court).

*shrug shoulders*

Stagflationary Mark said...


You speak dangerous words.

It's the only way I can explain why Blogger keeps marking your comments as SPAM.

Makes no sense.

Could you at least provide a link to a questionable "Get Rich Quick" scheme or something? Just so all is right in my world again? Hahaha! :)

Anonymous said...

Dearieme is the one name I see on every comment thread of every blog I've ever bothered to read. Either he's my virtual doppelganger; multiple employees of a certain TLA govt agency sharing a single handle; or comments on every blog out the internet so that I'm merely sampling his much, much broader blogography.

I reckon the latter two contingencies could have caused something in the Googleplex to flag his name and IP as that of a spammer.

Stagflationary Mark said...


multiple employees of a certain TLA govt agency sharing a single handle

You speak dangerous words too, yet your "Anonymous" comment is not marked as SPAM.

Why? Who are you? How many of you are there? Who do you work for? How did you and your people attain such power over this blog's SPAM blocker?

Oh, crap. I was lured into asking dangerous questions! I hear the black helicopters circling again. Hahaha!

P.S. In all seriousness, thanks for reading my blog. :)