Tuesday, October 28, 2014

Exponential Trend Failure of the Day: Investment Fundamentals (Musical Tribute)

The following stack chart shows the 10-year moving average of real annual interest and dividend income per capita (August 2014 dollars).

Click to enlarge.

Now let's look at a line chart of the data and add a few trend lines.

Click to enlarge.

What an epic exponential trend failure that is. The data was following a nearly perfect exponential trend (r-squared = 0.999) in red, right up until it wasn't.

Perhaps the Fed is going to need to offer more "Juice" over the long-term than they currently believe. You know, in case a "pandemic of pension woes is plaguing the nation".

Oh, and that "new and improved" exponential trend in blue with its dubious 0.2% growth rate? Just call it angle of the mourning!

In all seriousness, don't these charts just scream increasing real prosperity? Well, either that or rearranging deck chairs on a ship that's listing (see angle of list). You make the call.

This is not investment advice.

Source Data:
St. Louis Fed: Custom Chart


Joseph Constable said...

It would be interesting to see wages and salaries vs. rental income as percentage of GDP over time.

Stagflationary Mark said...

Joseph Constable,

Rental Income / GDP (left scale) vs. Wages and Salary Accruals / GDP (right scale)

As seen in the chart:

1. Rental income (as a % of GDP) has moved roughly 3% higher since 1990.

2. Wages (as a % of GDP) have moved roughly 3% lower since 1990.

Good call on how interesting that would be. Sigh.

1990 is about the time we started ramping up our serious trade deficit, so this chart isn't all that surprising. :(

Anonymous said...

Why include interest - that's just for old folks. Dividends are where it's at. Eventually, interest will just fade away.


Stagflationary Mark said...


Eventually we're all dead?

Old people, interest, you name it? ;)