Real GDP Growth: A Long Term Perspective

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A picture's worth a thousand words.

Have no fear though! Ben Bernanke assures us that 2.9% to 3.6% real GDP growth is coming back in 2015. And let's not forget the 3.5% real yields that will no doubt come with it! Mark them on your calendar people! Good times ahead! Just need to keep pushing this wreck of a derailed economic train right back on the tracks. What could possibly go wrong?

This post is in response to every talking head on CNBC who tells me to keep a long-term perspective. Oh, yeah. I'm keeping a long-term perspective all right. Don't you worry about that, lol. Sigh.

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

Housing Starts and Stops

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32% annual growth can't last forever. Right?

As a side note, February of 2011 holds a special place in my heart.

February 2, 2011
More Dangerous Advice from Jeremy Siegel

"All this means that Tips investors should beware. Although Tips may compensate holders for future inflation, the interest rate that they offer is far too low to offset the risk of rising rates."

It's been 2 1/2 years since Jeremy Siegel warned us.


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Behold the rising interest rate environment!



See Also:
The Road Not Taken

Source Data:
St. Louis Fed: Housing Starts
St. Louis Fed: Federal Funds Rate

What Could Possibly Go Wrong?

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That?

It's just a simple answer to a simple question. I'm not saying that it will happen. I'm simply saying that it could happen.

July 17, 2013
Hilsenrath: What Bernanke Means

“If a substantial part of the reductions in measured unemployment were judged to reflect cyclical declines in labor force participation rather than gains in employment, the committee would be unlikely to view a decline in unemployment to 6.5 percent (unemployment rate) as a sufficient reason to raise its target for the federal funds rate.

What if we don't even make it down to 6.5 percent before the next recession hits? As seen in the following link, Ben Bernanke's powers of assumption appear to exceed his powers of prediction (by a fairly wide margin).

October 25, 2005
Bernanke: There's No Housing Bubble to Go Bust

"Without these policy blunders by the Federal Reserve, there is little reason to believe that the 1929 crash would have been followed by more than a moderate dip in U.S. economic activity," Bernanke wrote.

Welcome to the first "moderate dip" of the 21st century. Thankfully, there was no housing bubble to go bust and therefore there were no monetary policy blunders leading into it, lol. Sigh.

Sarcasm, it isn't just for breakfast any more.

See Also:
Trend Line Disclaimer

Source Data:
St. Louis Fed: Custom Chart

The Housing "Recovery" in One Chart

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Welcome to 1989.

Source Data:
St. Louis Fed: Custom Chart

Exponential Trend Failure of the Day

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How are we doing relative to the long-term exponential trend?


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It could be worse I suppose. At least we're still in the declining trend channel.

Source Data:
St. Louis Fed: Industrial Production Index

The Road Not Taken

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The Road Not Taken

Two roads diverged in a yellow wood,
And sorry I could not travel both
And be one traveler, long I stood
And looked down one as far as I could
To where it bent in the undergrowth;

Then took the other, as just as fair,
And having perhaps the better claim,
Because it was grassy and wanted wear;
Though as for that the passing there
Had worn them really about the same,

And both that morning equally lay
In leaves no step had trodden black.
Oh, I kept the first for another day!
Yet knowing how way leads on to way,
I doubted if I should ever come back.

I shall be telling this with a sigh
Somewhere ages and ages hence:
Two roads diverged in a wood, and I—
I took the one less travelled by,
And that has made all the difference.

Source Data:
St. Louis Fed: Custom Chart
The Road Not Taken, by Robert Frost (1916)

The Softer Side of Department Store Sales

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As disturbing as that chart looks for owners of department store stock, I have something even more disturbing to point out. It's not even adjusted for inflation! Am I done disturbing you yet? Not even close. It's going down as the population grows! Here's a crazy thought to maximize the discomfort. Let's chart where we are relative to that long-term trend in red.


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Hey, that looks an awful lot like I'm charting business cycles. We're more than 2% below the declining trend again (just like we were in 2002 and 2008). Third time's the charm!

I do have some words of encouragement for those who believe that the economy is virtually guaranteed to accelerate to the upside soon though. Good luck on that theory! Nothing is impossible if we all set our minds to it (and nobody panics at the first sign of things becoming unglued again)!

I'm known for my undying optimism you know, and/or my sarcasm. Mostly my sarcasm I guess. ;)

Have I mentioned lately that I have no desire to embrace "risk on" assets? Seriously. Sigh.

This is not investment advice.

See Also:
Third Time's the Charm (Musical Tribute)

Source Data:
U.S. Census: Monthly & Annual Retail Trade

Third Time's the Charm (Musical Tribute)

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As I look at the chart, I can't help but ask myself three questions.

1. Has the Fed permanently put an end to recessions?
2. What are the odds that the economy will soon accelerate to the upside from here?
3. Is this really the best time in all of recorded history to put new money to work in the stock market?

If you've been reading my blog, then you can probably guess my answers.

For those just tuning in, this is actually an update to a chart that I created back in March of 2012. Unfortunately, we're pretty much right on schedule. Check out the link.

I do not believe that retail sales will hit 72% of wages during this business cycle. That's just a guess though. I suppose it could happen. What is more important to me is how low this percentage goes once the peak is in.



Retail sales for June will be released a few short hours from now. I'm hardly sitting on pins and needles anxiously awaiting the report though. Regardless of what the numbers show, one month does not make a trend. One data point will not dramatically impact what the chart in this post is trying to say.

Source Data:
St. Louis Fed: Custom Chart