Click to enlarge.
I have added a trend line in red.
1. It's a parabola.
2. Parabolas are definitely not sustainable.
3. I am deeply concerned about our country's long-term future.
Any questions?
Update:
In case you are interested, here is the raw version of the chart. I am not using a 30-year moving average to smooth things out in this one.
Click to enlarge.
Note that the parabola still fits extremely well. The data is noisier, so we can't expect a perfect fit of course.
Source Data:
St. Louis Fed: Custom Chart
Reference your "deeply concerned" remark: Your Update chart offers a ray of hope that we may have a trend failure in progress. To me it means the country is deleveraging to a less burdensome and hazardous leverage ratio.
ReplyDeleteThis is not a good thing?
-psychodave
pscyhodave,
ReplyDeleteThis is not a good thing?
It would be a good thing if the deleveraging would continue to a less burdensome and hazardous leverage ratio. Agreed!
Unfortunately, as seen in the following chart, the recent trend suggests a reversal back to the long-term parabola. Sigh.
YOY Change
I think you are too pessimistic about the sustainability of parabolas.
ReplyDeleteIf you take all your pessimistic parabola formulas and factored-in the growth-rate of human optimism I think you'd find most of the parabolic lines simply flatten out.
In fact, if you took all your data, which - over the years - you've used to create your parabolas (all of it) and threw it (the data) into the giant "parabola blender" it would "reveal" the rate-of-human-optimism.
I've always suspected that the rate-of-human-optimism has already be calculated by "The Fed" (probably with help from the space aliens that helped us win WW2) and that's what they use as their "target inflation rate". After all, if you inflate-away money at the rate-of-human-optimism would anybody notice? (Apparently not).
Here's a closer look.
ReplyDeleteYOY Change
0% is the deleveraging/leveraging line.
If we're above 0%, we're leveraging.
If we're below it, we're deleveraging.
We are currently deleveraging, barely. The trend is looking like it won't last much longer though. Sigh.
Anonymous,
ReplyDeleteYou could very well be right! I have not factored in the parabolic optimism factor! Hahaha!
If one needs faith to believe in growth, then it stands to reason that....
One simply needs parabolic faith to believe in parabolic growth!
Genius! :)
Hi S. Mark,
ReplyDeleteJust saw the "here's a closer look" graph. Now I get it. Thanks very much (for the very bad news).
-psychodave
psychodave,
ReplyDeleteThere's really no need to thank me for the very bad news. It's a free service I provide to those who want to be clinically depressed in advance of our next economic depression. You know, so they can be proactive instead of reactive, lol. Sigh.
Gallows humor. :(