Wednesday, March 26, 2014

Our "Durable" Economy

The following chart shows the 12 month moving average of real manufacturers' nondefense capital goods new orders excluding aircraft per capita (February 2014 dollars).

Click to enlarge.

Many financial "experts" are talking about growth really picking up from here but in reality:

1. We are really struggling to make it back to the trough of the dotcom bust.
2. Real growth has been really stagnant for the past 2 years.
3. Stagnation really happened at the top of the previous two bubbles.
4. What came next was really unpleasant.

So what's going to make growth accelerate from here? Taper 2.0? ZIRP^2? More hype?

King is the latest disappointment in a much-hyped and widely watched tech IPO.

Source Data:
St. Louis Fed: Custom Chart


Mr Slippery said...

King is the latest disappointment in a much-hyped and widely watched tech IPO.

Candy [Mountain] Crush.

From the Candy Crush Saga web site...
Experience the new & enchanting Dreamworld!

Troy said...

So what's going to make growth accelerate from here?

moar people!

oops, I forgot that YOY growth in the age 20-29 population is going to average 0.2% pa from here through 2019, and this population is even going to decline slightly 2019-2025.

In 2014 there are 44.7M young adults, in 2021 same, and in 2031 there will be . . . 44.7M!

So demographic expansion is only going to come from the existing Gen Y (age 12-30) moving out of the nest, not expansion of young people as a whole.

One demographic tailwind is that the differential between the total age 18-25 population and age 62-69 is 10M now (10M more people entering the workforce than leaving it), but this has fallen from 11M in 2012, and will be 4M by 2020 and bottom out at 2M by 2027, oscillating back up to 9M in 2041 (then falling again as Gen Y retires en masse, assuming SSA still exists then).

So we're going to need less growth per se, though as you mentioned previously our pension funds still need 7% growth every year or we'll have hundreds of billions of promises there we can't cash.

Troy said...

market cap of $2.2B for an app company!

imagine our faces in our CS classes if our profs could have showed us these headlines back in the 1980s.

Microsoft was IIRC sub $5B for the entire 1980s.

I chose the right major, just gotta get my * done and make my own luck . . .

Stagflationary Mark said...

Mr Slippery,

Candy [Mountain] Crush.

Hahaha! Nicely played. I should have thought of factoring in the long standing Candy Mountain theme here.

Thanks for steering me back on course, lol.

Stagflationary Mark said...


My girlfriend plays Candy Crush a lot. She's never spent a penny on it, although they apparently make their money off people with little self-control. Want to play more? No problem. Cough up the cash!

Personally, I don't think that freemium should deserve a premium (especially if every company starts duplicating their success).

That said, I made plenty of money off of Magic the Gathering because I thought it would be addicting to others, even though I have never personally purchased a card. That's not to say I wouldn't have wanted to start buying the cards. I just knew how hard it would be to stop once I started, lol.

I am definitely prone to addictions (video gaming) but not when it comes to expensive habits (coffee, alcohol, drugs, gambling).