Thursday, October 30, 2014

Real Personal Consumption Expenditures per Capita

Click to enlarge.

I've got bad news, bad news, bad news, bad news, and bad news.

First, the bad news. As seen in the chart, thanks to the exponential trend failure during the Great Recession, on average we're each consuming roughly $6,500 less per year now than some would have projected (predictions for 2014 based on conditions from 1991 to 2007).

Now, the bad news. The new exponential growth trend is just 1.4% compared to the previous 2.6%. Since the r-squared is extremely high (0.99) for both trends, it's kind of like we've been permanently hobbled. Perhaps the future is not so bright after all.

Ready for the bad news? Here it comes. The Fed sure did a lot of experiments over the past 5 years. Nothing they did seem to alter the crappy 1.4% growth trend though, not even in the slightest. So why are we hanging on every word they say again? Bernanke once joked, "The problem with QE is that it works in practice, but it doesn’t work in theory." Quite the comedian!

Next, the bad news. There's no guarantee that this new trend in red will not fail again, and if it does then there's a distinct possibility that it too will fail to the downside. Won't that be a party! I say this as a believer in the Illusion of Prosperity since 2007 of course, so perhaps I'm biased.

And finally, the bad news. Since the wealthiest among us are growing their wealth and income much faster than the average among us, the wealthiest among us are more than likely pulling up the average. Put another way, this horrible chart is probably an extremely optimistic way to look at what the typical American is experiencing.

I do have some good news though, and it deserves its own paragraph.

If you are a highly compensated financial analyst and it is your job to predict real personal consumption per capita growth, I suggest sticking with 1.4% from here. What's the point of sifting through all the data when the trend is so solid? Of course, you'll be blindsided during the next trend failure. So what? Nearly everyone will be! You can hardly be blamed for that! So, sit back. Put your feet up on your desk and relax. Surf the web if you like. Look at new high end luxury vehicles. Who is going to know any different? But, and I cannot emphasize this enough, always be ready with a slick PowerPoint presentation once the Analyst of the Decade awards start showing up! You deserve nothing but the best!

Source Data:
St. Louis Fed: Custom Chart


Anonymous said...

Just treading water.

Stagflationary Mark said...


Indeed. If/when the tide goes out again, there are going to be more than a few naked swimmers flopping on the beach. Sigh.

Anonymous said...

I'd better get off the public beach then.

Anonymous said...

So people without jobs don't spend money? Amazing. I wonder if this is news to those geniuses at the Federal Reserve. (I guess the Democrts will finally figure that out on November 4th when they get creamed.)

dd said...

Well we've all been waiting for the next meltdown and it will be upon us with some tremors in the force by year end (Christmas retail sucks!) and then purple fingers and greens shoots are just around the us until the next "unexpected" debacle. I'm on board for a reverse repo mishap spilling over into MMFs, derivatives and bonds. Replication is a really bad idea.

Stagflationary Mark said...


May 28, 2014
The Onion: Beach Safety Tips

Crowded beaches can be a hot spot for thieves. If you must leave your valuables unattended, keep them safe by burying them at least 15 feet under the sand and parking your car over the hole.

Fritz_O said...

trust us until the next "unexpected" debacle.

Yellen L.L.C. wound down QE3 for one reason: to set the stage for QE4.

No worries.

Stagflationary Mark said...


Over the long-term, we can continue to grow this economy at a snail's pace. Just need to keep adding restaurant jobs! Can't ever have too many restaurants!

With apartment evictions up and the homeownership rate down, people will need a place to eat!

Gallows sarcasm. Sigh.

Stagflationary Mark said...


greens shoots are just around the corner

Speaking of public beaches and green shoots...

February 19, 2013
The Onion: Seagull With Diarrhea Barely Makes It To Crowded Beach In Time

Stagflationary Mark said...


We'll need QEFort if this Christmas is a bust.