Monday, September 22, 2014

Real GDP Growth (Musical Tribute)

The following chart shows the 10 year moving average of annual real GDP growth. I have added a linear trend in red and a channel to go with it (± 0.9%).

Click to enlarge.

1. Why are we stuck at the bottom of the awful trend channel?
2. Is it any wonder that real yields have been falling for decades?
3. Where are we headed from here and why am I in this basket?

No stop signs
Speed limit
Nobody's gonna slow me down

Source Data:
St. Louis Fed: Real Gross Domestic Product


Who Struck John said...

It's all fun and games until the lower bound goes negative.

Stagflationary Mark said...

And stays negative...
And the upper bound goes negative...
And stays negative...
And it's mentioned on the nightly news every night because there's looting?

I hope I'm joking, lol. Sigh.

Mr Slippery said...

He's back! And this time it's personal.

Since we are at the bottom of the channel, will we get a sharp reversion to the trend line?

My bond ladder is complete. Nothing more to do but sit back to collect that sweet, sweet, yield to worst.

Sustainable Gains said...

apropos of prior thread, it turns out I was wrong, the Fed *is* still selling the "interest on excess reserves" aka "free lunches for bankers" plan to normalize rates:

This is NOT the method used to normalize rates in the past. There are huge potential unintended consequences.

This issue needs serious, PUBLIC, scrutiny.

But I don't think anyone has paid it any attention (except for those obviously about to benefit).

What could possibly go wrong?

Obomba Harris said...

Where are we headed from here and why am I in this basket?

Good news! We're no longer just trying to borrow our way to prosperity. We're now also trying to bomb our way to prosperity (Iraq, Afganistan, Libya, Pakistan, Yemen, Syria....)

Coalition of the .......

Stagflationary Mark said...

Mr Slippery,

Since we are at the bottom of the channel, will we get a sharp reversion to the trend line?

It's possible. We just need to go recession free until 2018 or so (so the Great Recession's horrible data falls out of the 10 year data window).

That's all. No biggie.

That said, it's also possible that the Fed can't push the next recession out that far. If so and the next recession comes sooner, we'll fall out of the bottom of that channel like passengers in a boat from Jaws! Got speargun? D'oh!

Stagflationary Mark said...

Sustainable Gains,

What could possibly go wrong?

Nothing! The Fed is perfectly managing the vast layers of unintended consequences and has for the first time in its existence put a permanent end to all things bad using complex real time adaptive artificial intelligence monetary policy algorithms!

Or... The turing machine is currently stuck at FedFundsRate = ZERO due to a software glitch and/or Blue Screen of Economic Death (BSOED) caused by inadequate testing.

Tough call, lol. Sigh.

Stagflationary Mark said...

Obomba Harris,

I joked a decade ago that we should be dropping GM vehicles on the evil doers *as* bombs! Kill two birds with one stone!

Just think of the pricing power at GM dealerships!

Customer: I expected the lot to be full during the recession. Where are all the cars?

Salesman: Last chance to buy a car! Most of these are heading to the Middle East! Buy now or forever be priced out!!

(Gallows humor. Sigh.)