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Twenty-Two Million Unemployed or Underemployed in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Job Creation, Cyclically Stagnating Real Wages, Cyclically Stagnating Real Disposable Income per Capita, Financial Repression, United States Balance of Payments Current Account and Net International Investment Position, World Cyclical Slow Growth and Global Recession Risk
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018
I Twenty-Two Million Unemployed or Underemployed
IA1 Summary of the Employment Situation
IA2 Number of People in Job Stress
IA3 Long-term and Cyclical Comparison of Employment
IA4 Job Creation
II Stagnating Real Disposable Income and Consumption Expenditures
IIB1 Stagnating Real Disposable Income and Consumption Expenditures
IB2 Financial Repression
IIC United States Balance of Payments Current Account and Net International Investment Position
III World Financial Turbulence
IV Global Inflation
V World Economic Slowdown
VA United States
VB Japan
VC China
VD Euro Area
VE Germany
VF France
VG Italy
VH United Kingdom
VI Valuation of Risk Financial Assets
VII Economic Indicators
VIII Interest Rates
IX Conclusion
References
Appendixes
Appendix I The Great Inflation
IIIB Appendix on Safe Haven Currencies
IIIC Appendix on Fiscal Compact
IIID Appendix on European Central Bank Large Scale Lender of Last Resort
IIIG Appendix on Deficit Financing of Growth and the Debt Crisis
I IB Stagnating Real Disposable Income and Consumption Expenditures. The Bureau of Economic Analysis (BEA) provides important revisions and enhancements of data on personal income and outlays since 1929 (http://www.bea.gov/iTable/index_nipa.cfm). There are waves of changes in personal income and expenditures in Table IB-1 that correspond somewhat to inflation waves observed worldwide (https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html) because of the influence through price indexes. There are wide fluctuations in Nov and Dec 2012 by the rush to realize income of all forms in anticipation of tax increases beginning in Jan 2013. There is major distortion in Jan 2013 because of higher contributions in payrolls to government social insurance that caused sharp reduction in personal income and disposable personal income. The Bureau of Economic Analysis (BEA) explains as follows (page 3 http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January [2013] changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December [2012] in anticipation of changes in individual tax rates.”
The BEA provides the annual update of the national income and product account (https://cmpassocregulationblog.blogspot.com/2017/07/data-dependent-monetary-policy-with_30.html): “Annual Update of the National Income and Product Accounts
The estimates released today reflect the results of the annual update of the national income and
product accounts (NIPAs) in conjunction with preliminary estimates for June 2017. The update covers the most recent 3 years and the first 5 months of 2017. For more information, see information on the “2017 Annual Update” on BEA’s website. Additionally, the August Survey of Current Business will contain an article that describes the results in detail.”
In the first wave in Jan-Apr 2011 with relaxed risk aversion, nominal personal income (NPI) increased at the annual equivalent rate of 7.7 percent, nominal disposable personal income (NDPI) at 5.2 percent and nominal personal consumption expenditures (NPCE) at 5.9 percent. Real disposable income (RDPI) increased at the annual equivalent rate of 1.2 percent and real personal consumption expenditures (RPCE) rose at annual equivalent 1.5 percent. In the second wave in May-Aug 2011 under risk aversion, NPI rose at annual equivalent 4.9 percent, NPDI at 4.9 percent and NPCE at 3.7 percent. RDPI increased at 1.8 percent annual equivalent and RPCE at 0.9 percent annual equivalent. With mixed shocks of risk aversion in the third wave from Sep to Dec 2011, NPI rose at 2.4 percent annual equivalent, NDPI at 2.4 percent and NPCE at 2.1 percent. RDPI increased at 1.5 percent annual equivalent and RPCE at 1.5 percent annual equivalent. In the fourth wave from Jan to Mar 2012, NPI increased at 8.3 percent annual equivalent, NDPI at 9.6 percent and NPCE at 4.3 percent. Real disposable income (RDPI) is more dynamic in the revisions, growing at 4.9 percent annual equivalent and RPCE at 2.1 percent. The policy of repressing savings with zero interest rates stimulated growth of nominal consumption (NPCE) at the annual equivalent rate of 4.3 percent and real consumption (RPCE) at 2.1 percent. In the fifth wave in Apr-Jul 2012, NPI increased at annual equivalent 1.2 percent, NDPI at 1.2 percent and RDPI at 0.9 percent. Financial repression failed to stimulate consumption with NPCE growing at 1.2 percent annual equivalent and RPCE at 0.9 percent. In the sixth wave in Aug-Oct 2012, in another wave of carry trades into commodity futures, NPI increased at 8.3 percent annual equivalent and NDPI increased at 7.9 percent while real disposable income (RDPI) increased at 3.7 percent annual equivalent. NPCE increased at 4.1 percent and RPCE changed at 0.0 percent. Data for Nov-Dec 2012 have illusory increases: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). In the seventh wave, anticipations of tax increases in Jan 2013 caused exceptional income gains that increased personal income to annual equivalent 25.3 percent in Nov-Dec 2012, nominal disposable income at 25.3 percent and real disposable personal income at 26.0 percent with likely effects on nominal personal consumption that increased at 2.4 percent and real personal consumption at 3.0 percent with subdued prices. The numbers in parentheses show that without the exceptional effects NDPI (nominal disposable personal income) increased at 5.5 percent and RDPI (real disposable personal income) at 8.7 percent. In the eighth wave, nominal personal income fell 5.2 percent in Jan 2013 or at the annual equivalent rate of decline of 47.3 percent; nominal disposable personal income fell 6.1 percent or at the annual equivalent rate of decline of 53.0 percent; real disposable income fell 6.2 percent or at the annual rate of decline of 53.6 percent; nominal personal consumption expenditures increased 0.3 percent or at the annual equivalent rate of 3.7 percent; and real personal consumption expenditures increased 0.2 percent or at the annual equivalent rate of 2.4 percent. The savings rate fell significantly from 11.0 percent in Dec 2012 to 4.9 percent in Jan 2013. The Bureau of Economic Analysis explains as follows (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf 3):
“Contributions for government social insurance -- a subtraction in calculating personal income -- increased $126.7 billion in January, compared with an increase of $6.3 billion in December. The
January estimate reflected increases in both employer and employee contributions for government social insurance. The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base; together, these changes added $12.8 billion to January. As noted above, employer contributions were boosted $5.9 billion in January, so the total contribution of special factors to the January change in contributions for government social insurance was $132.8 billion”
Further explanation is provided by the Bureau of Economic Analysis (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3):
“Contributions for government social insurance -- a subtraction in calculating personal income --increased $6.4 billion in February, compared with an increase of $126.8 billion in January. The
January estimate reflected increases in both employer and employee contributions for government social insurance. The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base; together, these changes added $12.9 billion to January. Employer contributions were boosted $5.9 billion in January, which reflected increases in the social security taxable wage base (from $110,100 to $113,700), in the tax rates paid by employers to state unemployment insurance, and in employer contributions for the federal unemployment tax and for pension guaranty. The total contribution of special factors to the January change in contributions for government social insurance was $132.9 billion. The January change in disposable personal income (DPI) mainly reflected the effect of special factors, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to December in anticipation of changes in individual tax rates. Excluding these special factors and others, which are discussed more fully below, DPI increased $46.8 billion in February, or 0.4 percent, after increasing $15.8 billion, or 0.1 percent, in January.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf). In the ninth wave in Feb-Mar 2013, nominal personal income increased at 3.0 percent and nominal disposable income at 2.4 percent annual equivalent, while real disposable income increased at 0.6 percent annual equivalent. Nominal personal consumption expenditures grew at 1.8 percent annual equivalent and real personal consumption expenditures at 0.0 percent annual equivalent. The savings rate collapsed from 7.8 percent in Oct 2012, 8.8 percent in Nov 2012 and 11.0 percent in Dec 2012 to 4.9 percent in Jan 2013, 4.7 percent in Feb 2013 and 4.8 percent in Mar 2013. In the tenth wave from Apr to Sep 2013, personal income grew at 4.1 percent annual equivalent, nominal disposable income increased at annual equivalent 3.7 percent and nominal personal consumption expenditures at 2.8 percent. Real disposable income grew at 2.6 percent annual equivalent and real personal consumption expenditures at 2.0 percent. In the eleventh wave, nominal personal income fell at 1.2 percent annual equivalent in Oct 2013, nominal disposable income at 1.2 percent and real disposable income at 3.5 percent. Nominal personal consumption expenditures increased at 4.9 percent annual equivalent and real personal consumption expenditures at 2.4 percent. In the twelfth wave, nominal personal income increased at 6.2 percent annual equivalent in Nov 2013, nominal disposable income at 4.9 percent and nominal personal consumption expenditures at 8.7 percent. Real disposable income increased at annual equivalent 3.7 percent and real personal consumption expenditures at 6.2 percent. In the thirteenth wave, nominal personal income increased at 4.9 percent annual equivalent in Dec 2013 and nominal disposable income at 3.7 percent while real disposable income increased at 1.2 percent annual equivalent. Nominal personal consumption expenditures increased at 2.4 percent annual equivalent and 0.0 percent for real personal consumption expenditures. In the fourteenth wave, nominal personal income increased at 8.3 percent annual equivalent in Jan-Mar 2014, nominal disposable income at 8.3 percent and nominal consumption expenditures at 5.3 percent. Real disposable personal income increased at 6.2 percent and real personal consumption expenditures at 3.2 percent. In the fifteenth wave, nominal personal income increased at 5.9 percent in annual equivalent in Apr-Aug 2014 and nominal disposable income at 5.9 percent. Real disposable income increased at 4.7 percent in annual equivalent in Apr-Aug 2014. Nominal personal consumption increased at 4.9 percent annual equivalent in Apr-Aug 2014 and real personal consumption expenditures increased at 3.9 percent. In the sixteenth wave, nominal personal income increased at 5.5 percent annual equivalent in Sep-Dec 2014, nominal disposable income at 5.2 percent and nominal personal consumption at 3.3 percent. Real disposable income increased at 6.2 percent in Sep-Dec 2014 and real personal consumption expenditure at 4.0 percent. In the seventeenth wave, nominal personal income increased at 4.3 percent annual equivalent in Jan-Feb 2015 and nominal disposable income increased at 2.4 percent while nominal personal consumption expenditures increased at 1.2 percent. Real disposable income increased at 4.3 percent and real personal consumption expenditures at 3.7 percent. In the eighteenth wave, nominal personal income (NPI) increased at 5.3 percent and nominal disposable personal income (NDPI) increased at 5.3 percent annual equivalent in Mar-Jun 2015. Real disposable income (RDPI) increased at 3.7 percent. Nominal consumption expenditures (NPCE) increased at 6.2 percent and real personal consumption expenditures (RPCE) increased at 4.1 percent. In the nineteenth wave, nominal personal income (NPI) increased at 2.8 percent in Jun-Aug 2015 and nominal disposable personal income (NDPI) at 2.8 percent. Real disposable income (RDPI) increased at 1.6 percent, nominal personal consumption expenditures (NPCE) at 3.7 percent and real personal consumption expenditures (RPCE) at 2.4 percent. In the twentieth wave, nominal personal income (NPI) increased at 3.0 percent annual equivalent in Sep-Dec 2015, nominal disposable personal income (NDPI) at 2.8 percent and nominal personal consumption expenditures (NPCE) at 4.5 percent. Real disposable personal income grew at 2.4 percent annual equivalent and real personal consumption expenditures at 3.0 percent. In the twenty-first wave, nominal personal income fell at 2.4 percent annual equivalent in Jan-Feb 2016. Nominal disposable personal income changed at 0.0 percent and nominal personal consumption expenditures increased at 2.4 percent. Real disposable personal income decreased at 1.2 percent and real personal consumption expenditures increased at 1.8 percent. In the twenty-second wave, nominal personal income increased at 5.5 percent in Mar-Apr 2016. Nominal disposable income increased at 4.9 percent and real disposable income grew at 2.4 percent. Nominal personal consumption expenditures grew at 5.5 percent and real personal consumption expenditures increased at 3.0 percent. In the twenty-third wave, nominal personal income increased at 3.7 percent in May-Jul 2016 and nominal disposable income at 3.7 percent while nominal consumption expenditures increased at 3.7 percent. Real disposable income increased at 1.6 percent and real consumption expenditures at 3.2 percent. In the twenty-fourth wave, nominal personal income increased at 0.8 percent in Aug-Oct 2016 and nominal disposable income at 0.4 percent while nominal consumption expenditures increased at 4.9 percent. Real disposable income decreased at 1.6 percent and real personal consumption expenditures increased at 2.8 percent. In the twenty-fifth wave, nominal personal income changed at 0.0 percent and nominal disposable income increased at 0.6 percent in Nov-Dec 2016. Nominal personal consumption expenditures increased at 4.9 percent. Real personal disposable income decreased at 2.4 percent and real personal consumption expenditures increased at 4.3 percent. In the twenty-sixth wave, nominal personal income increased at annual equivalent 8.7 percent in Jan-Feb 2017, nominal disposable income at 8.7 percent and nominal personal consumption expenditures at 2.4 percent. Real disposable income increased at 5.5 percent and real personal consumption expenditures fell at 0.6 percent. In the twenty-seventh wave, nominal personal income increased at 2.4 percent in Mar-May 2017 and nominal disposable income at 3.7 percent while nominal personal consumption increased at 4.1 percent. Real disposable income increased at 3.2 percent annual equivalent and real personal consumption expenditures increased at 4.5 percent. In the twenty-eighth wave, nominal personal income changed at 0.0 percent in Jun 2017 and nominal disposable income changed at 0.0 percent while nominal personal consumption increased at 1.2 percent. Real disposable income decreased at 1.2 percent and real consumption expenditures increased at 1.2 percent. In the twenty-ninth wave, nominal personal income increased at 4.3 percent in Jul-Aug 2017 while nominal disposable personal income increased at 2.4 percent. Real disposable income changed at 0.6 percent. Nominal personal consumption expenditures increased at 3.0 percent and real personal consumption expenditures increased at 1.2 percent. In the thirtieth wave, nominal personal income increased at 5.5 percent in Sep-Oct 2017 while nominal disposable personal income increased at 4.3 percent. Real disposable income increased at 1.2 percent. Nominal personal consumption expenditures increased at 8.1 percent and real personal consumption expenditures increased at 4.9 percent. In the thirty-first wave, nominal personal income increased at 3.7 percent in Nov 2017 while nominal disposable personal income increased at 3.7 percent. Nominal personal consumption expenditures increased at 8.7 percent. Real disposable income increased at 1.2 percent and real personal consumption expenditures increased at 6.2 percent. In the thirty-second wave, nominal personal income increased at 4.9 percent in Dec 2017-Feb 2018 while nominal disposable personal income increased at 7.4 percent. Nominal personal consumption expenditures increased at 3.7 percent. Real disposable income increased at 4.1 percent and real personal consumption expenditures increased at 0.4 percent.
There is socio-economic stress in the combination of adverse events and cyclical performance:
- Mediocre economic growth below potential and long-term trend, resulting in idle productive resources with GDP two trillion dollars below trend (https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states.html). US GDP grew at the average rate of 3.2 percent per year from 1929 to 2017, with similar performance in whole cycles of contractions and expansions, but only at 1.4 percent per year on average from 2007 to 2017. GDP in IVQ2017 is 14.2 percent lower than what it would have been had it grown at trend of 3.0 percent
- Private fixed investment stagnating at cumulative increase of 15.0 percent in the entire cycle from IVQ2007 to IVQ2017 (https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states.html)
- Twenty-Three million or 13.3 percent of the effective labor force unemployed or underemployed in involuntary part-time jobs with stagnating or declining real wages (Section I and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/fluctuating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/fluctuating-risk-financial-assets-in.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/weakening-equities-with-exchange-rate.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-fed-funds-rate-followed-by.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/turbulence-of-financial-asset.html)
- Stagnating real disposable income per person or income per person after inflation and taxes (Section II and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/fluctuating-risk-financial-assets-in.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html)
- Depressed hiring that does not afford an opportunity for reducing unemployment/underemployment and moving to better-paid jobs (https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/collateral-effects-of-unwinding.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-rising.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/fomc-increases-interest-rates-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/recovery-without-hiring-ten-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/dollar-devaluation-and-valuation-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/flattening-us-treasury-yield-curve.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/recovery-without-hiring-ten-million_14.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/recovery-without-hiring-ten-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/unconventional-monetary-policy-and.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-values-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/dollar-revaluation-and-valuations-of.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/imf-view-of-world-economy-and-finance.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rate-uncertainty-and-valuation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/rising-valuations-of-risk-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/oscillating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/considerable-uncertainty-about-economic.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-reducing.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/contraction-of-united-states-corporate.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/subdued-foreign-growth-and-dollar.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/unconventional-monetary-policy-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-volatile_17.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-policy-conundrum-recovery.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/impact-of-monetary-policy-on-exchange.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what_13.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/oscillating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/volatility-of-financial-asset.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/volatility-of-financial-asset.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/dollar-revaluation-recovery-without.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-exchange-rate-struggle-recovery.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/g20-monetary-policy-recovery-without.html)
- Productivity growth fell from 2.1 percent per year on average from 1947 to 2017 and average 2.3 percent per year from 1947 to 2007 to 1.2 percent per year on average from 2007 to 2017, deteriorating future growth and prosperity (https://cmpassocregulationblog.blogspot.com/2018/03/united-states-inflation-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/collateral-effects-of-unwinding.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/12/fomc-increases-interest-rates-with.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/11/recovery-without-hiring-ten-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/ii-rules-discretionary-authorities-and.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/recovery-without-hiring-ten-million_40.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/flattening-us-treasury-yield-curve.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/recovery-without-hiring-ten-million_14.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-values-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/rising-valuations-of-risk-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/considerable-uncertainty-about-economic.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-fed-funds-rate-followed-by.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/quite-high-equity-valuations-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/financial-risks-twenty-six-million.html)
- Output of manufacturing in Feb 2018 at 29.9 percent below long-term trend since 1919 and at 21.1 percent below trend since 1986 (https://cmpassocregulationblog.blogspot.com/2018/03/united-states-inflation-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/mediocre-cyclical-united-states_23.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/the-lost-economic-cycle-of-global_25.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/world-inflation-waves-long-term-and.html and earlier) (https://cmpassocregulationblog.blogspot.com/2017/09/monetary-policy-of-reducing-central.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/07/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/fomc-interest-rate-increase-planned.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/united-states-commercial-banks-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/fomc-increases-interest-rates-world.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/of-course-economic-outlook-is-highly.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/fomc-projections-world-inflation-waves.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/04/contracting-united-states-industrial.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-competitive.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/unconventional-monetary-policy-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html
and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html)
- Unsustainable government deficit/debt and balance of payments deficit (https://cmpassocregulationblog.blogspot.com/2017/04/mediocre-cyclical-economic-growth-with.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-reducing.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/weakening-equities-and-dollar.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/06/valuation-risks-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/02/theory-and-reality-of-cyclical-slow.html http://cmpassocregulationblog.blogspot.com/2014/03/interest-rate-risks-world-inflation.html http://cmpassocregulationblog.blogspot.com/2013/12/tapering-quantitative-easing-mediocre.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html)
- Worldwide waves of inflation (https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/fomc-increases-interest-rates-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/dollar-devaluation-and-decline-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/world-inflation-waves-long-term-and.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/dollar-devaluation-and-valuation-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/fomc-interest-rate-increase-planned.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/fomc-increases-interest-rates-world.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/of-course-economic-outlook-is-highly.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/oscillating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/fomc-projections-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/contracting-united-states-industrial.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-competitive.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/uncertainty-of-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/interest-rate-policy-and-dollar.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/irrational-exuberance-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/competitive-currency-conflicts-world.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/financial-oscillations-world-inflation.html http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/08/monetary-policy-world-inflation-waves.html http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html)
- Deteriorating terms of trade and net revenue margins of production across countries in squeeze of economic activity by carry trades induced by zero interest rates (https://cmpassocregulationblog.blogspot.com/2018/03/united-states-inflation-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/mediocre-cyclical-united-states_23.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/the-lost-economic-cycle-of-global_25.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/world-inflation-waves-long-term-and.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/monetary-policy-of-reducing-central.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/dollar-devaluation-and-valuation-of.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/fomc-interest-rate-increase-planned.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/united-states-commercial-banks-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/fomc-increases-interest-rates-world.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/of-course-economic-outlook-is-highly.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/fomc-projections-world-inflation-waves.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/imf-view-of-world-economy-and-finance.html and earlier) (http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-competitive.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/uncertainty-of-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/global-decline-of-values-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.html
- Financial repression of interest rates and credit affecting the most people without means and access to sophisticated financial investments with likely adverse effects on income distribution and wealth disparity (Section II and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier (https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/closely-monitoring-global-economic-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/global-competitive-devaluation-rules.html and earlier http://cmpassocregulationblog.blogspot.com/2015/02/job-creation-and-monetary-policy-twenty.html and earlier (http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/growth-uncertainties-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/world-financial-turbulence-twenty-seven.html)
- 43 million in poverty and 29 million without health insurance with family income adjusted for inflation regressing to 1999 levels (http://cmpassocregulationblog.blogspot.com/2016/09/the-economic-outlook-is-inherently.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-uncertainty-imf.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2013/09/duration-dumping-and-peaking-valuations.html)
- Net worth of households and nonprofits organizations increasing by 26.6 percent after adjusting for inflation in the entire cycle from IVQ2007 to IVQ2017 when it would have grown over 35.7 percent at trend of 3.1 percent per year in real terms from IVQ1945 to IVQ2017(https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/destruction-of-household-nonfinancial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/united-states-commercial-banks-united.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/03/recovery-without-hiring-ten-million.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/rules-versus-discretionary-authorities.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/the-economic-outlook-is-inherently.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/of-course-considerable-uncertainty.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-fluctuations-of_13.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/weakening-equities-and-dollar.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/monetary-policy-designed-on-measurable.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/dollar-revaluation-and-financial-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/valuations-of-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/financial-volatility-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/06/financial-indecision-mediocre-cyclical.html and earlier http://cmpassocregulationblog.blogspot.com/2014/03/global-financial-risks-recovery-without.html and earlier http://cmpassocregulationblog.blogspot.com/2013/12/collapse-of-united-states-dynamism-of.html). Financial assets increased $27.6 trillion while nonfinancial assets increased $5.9 trillion with likely concentration of wealth in those with access to sophisticated financial investments. Real estate assets adjusted for inflation increased 2.0 percent.
The United States economy has grown at the average yearly rate of 3 percent per year and 2 percent per year in per capita terms from 1870 to 2010, as measured by Lucas (2011May). An important characteristic of the economic cycle in the US has been rapid growth in the initial phase of expansion after recessions. Inferior performance of the US economy and labor markets is the critical current issue of analysis and policy design. Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. US economic growth has been at only 2.2 percent on average in the cyclical expansion in the 34 quarters from IIIQ2009 to IVQ2017. Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 2010 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) and the third estimate of GDP for IVQ2017 (https://www.bea.gov/newsreleases/national/gdp/2018/pdf/gdp4q17_3rd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.7 percent obtained by dividing GDP of $14,745.9 billion in IIQ2010 by GDP of $14,355.6 billion in IIQ2009 {[($14,745.9/$14,355.6) -1]100 = 2.7%], or accumulating the quarter on quarter growth rates (https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states.html). The expansion from IQ1983 to IVQ1985 was at the average annual growth rate of 5.9 percent, 5.4 percent from IQ1983 to IIIQ1986, 5.2 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.7 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989. 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991 and at 7.8 percent from IQ1983 to IVQ1983 (https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states_31.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/mediocre-cyclical-united-states.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IVQ2017 would have accumulated to 34.4 percent. GDP in IVQ2017 would be $20,149.0 billion (in constant dollars of 2009) if the US had grown at trend, which is higher by $2862.5 billion than actual $17,286.5 billion. There are about two trillion dollars of GDP less than at trend, explaining the 22.6 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.3 percent of the effective labor force (https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html). US GDP in IVQ2017 is 14.2 percent lower than at trend. US GDP grew from $14,991.8 billion in IVQ2007 in constant dollars to $17,286.5 billion in IVQ2017 or 15.3 percent at the average annual equivalent rate of 1.4 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.2 percent per year from Feb 1919 to Feb 2018. Growth at 3.2 percent per year would raise the NSA index of manufacturing output from 108.2393 in Dec 2007 to 149.0946 in Feb 2018. The actual index NSA in Feb 2018 is 104.4525, which is 29.9 percent below trend. Manufacturing output grew at average 2.0 percent between Dec 1986 and Feb 2018. Using trend growth of 2.0 percent per year, the index would increase to 132.3793 in Feb 2018. The output of manufacturing at 104.4525 in Feb 2018 is 21.1 percent below trend under this alternative calculation.
Table IB-1, US, Percentage Change from Prior Month Seasonally Adjusted of Personal Income, Disposable Income and Personal Consumption Expenditures %
| NPI | NDPI | RDPI | NPCE | RPCE | |
| Feb 2018 | 0.4 | 0.4 | 0.2 | 0.2 | 0.0 |
| Jan | 0.4 | 1.0 | 0.6 | 0.2 | -0.2 |
| Dec 2017 | 0.4 | 0.4 | 0.2 | 0.5 | 0.3 |
| AE ∆% Dec-Feb | 4.9 | 7.4 | 4.1 | 3.7 | 0.4 |
| Nov | 0.3 | 0.3 | 0.1 | 0.7 | 0.5 |
| AE ∆% Nov | 3.7 | 3.7 | 1.2 | 8.7 | 6.2 |
| Oct | 0.4 | 0.3 | 0.1 | 0.3 | 0.2 |
| Sep | 0.5 | 0.4 | 0.0 | 1.0 | 0.6 |
| AE ∆% Sep-Oct | 5.5 | 4.3 | 1.2 | 8.1 | 4.9 |
| Aug | 0.3 | 0.2 | 0.0 | 0.2 | 0.0 |
| Jul | 0.4 | 0.2 | 0.1 | 0.3 | 0.2 |
| AE ∆% Jul-Aug | 4.3 | 2.4 | 0.6 | 3.0 | 1.2 |
| Jun | 0.0 | 0.0 | -0.1 | 0.1 | 0.1 |
| AE ∆% Jun | 0.0 | 0.0 | -1.2 | 1.2 | 1.2 |
| May | 0.2 | 0.4 | 0.4 | 0.2 | 0.3 |
| Apr | 0.1 | 0.2 | -0.1 | 0.3 | 0.1 |
| Mar | 0.3 | 0.3 | 0.5 | 0.5 | 0.7 |
| AE ∆% Mar-May | 2.4 | 3.7 | 3.2 | 4.1 | 4.5 |
| Feb | 0.5 | 0.5 | 0.4 | 0.1 | 0.0 |
| Jan | 0.9 | 0.9 | 0.5 | 0.3 | -0.1 |
| AE ∆% Jan-Feb | 8.7 | 8.7 | 5.5 | 2.4 | -0.6 |
| Dec 2016 | 0.1 | 0.0 | -0.2 | 0.5 | 0.4 |
| Nov | -0.1 | -0.1 | -0.2 | 0.3 | 0.3 |
| AE ∆% Nov-Dec | 0.0 | 0.6 | -2.4 | 4.9 | 4.3 |
| Oct | 0.0 | 0.0 | -0.2 | 0.3 | 0.1 |
| Sep | 0.1 | 0.1 | -0.1 | 0.6 | 0.5 |
| Aug | 0.1 | 0.0 | -0.1 | 0.3 | 0.1 |
| AE ∆% Aug-Oct | 0.8 | 0.4 | -1.6 | 4.9 | 2.8 |
| Jul | 0.3 | 0.3 | 0.2 | 0.3 | 0.2 |
| Jun | 0.3 | 0.3 | 0.1 | 0.5 | 0.4 |
| May | 0.3 | 0.3 | 0.1 | 0.4 | 0.2 |
| AE ∆% May-Jul | 3.7 | 3.7 | 1.6 | 3.7 | 3.2 |
| Apr | 0.6 | 0.5 | 0.2 | 0.8 | 0.5 |
| Mar | 0.3 | 0.3 | 0.2 | 0.1 | 0.0 |
| AE ∆% Mar-Apr | 5.5 | 4.9 | 2.4 | 5.5 | 3.0 |
| Feb | -0.2 | -0.1 | -0.1 | 0.4 | 0.4 |
| Jan | -0.2 | 0.1 | -0.1 | 0.0 | -0.1 |
| AE ∆% Jan-Feb | -2.4 | 0.0 | -1.2 | 2.4 | 1.8 |
| 2015 | |||||
| Dec | 0.0 | 0.0 | 0.1 | 0.3 | 0.3 |
| Nov | 0.2 | 0.1 | 0.0 | 0.4 | 0.3 |
| Oct | 0.6 | 0.4 | 0.4 | 0.1 | 0.1 |
| Sep | 0.2 | 0.2 | 0.3 | 0.3 | 0.3 |
| AE ∆% Sep-Dec | 3.0 | 2.8 | 2.4 | 4.5 | 3.0 |
| Aug | 0.3 | 0.3 | 0.3 | 0.3 | 0.3 |
| Jul | 0.1 | 0.1 | 0.0 | 0.4 | 0.3 |
| Jun | 0.3 | 0.3 | 0.1 | 0.2 | 0.0 |
| AE ∆% Jun-Aug | 2.8 | 2.8 | 1.6 | 3.7 | 2.4 |
| May | 0.6 | 0.6 | 0.4 | 0.6 | 0.4 |
| Apr | 0.6 | 0.6 | 0.6 | 0.2 | 0.1 |
| Mar | 0.1 | 0.1 | -0.1 | 0.7 | 0.5 |
| AE ∆% Mar-Jun | 5.3 | 5.3 | 3.7 | 6.2 | 4.1 |
| Feb | 0.5 | 0.5 | 0.4 | 0.3 | 0.2 |
| Jan | 0.2 | -0.1 | 0.3 | -0.1 | 0.4 |
| AE ∆% Jan-Feb | 4.3 | 2.4 | 4.3 | 1.2 | 3.7 |
| 2014 | |||||
| Dec | 0.3 | 0.3 | 0.5 | 0.0 | 0.2 |
| Nov | 0.5 | 0.5 | 0.6 | 0.4 | 0.5 |
| Oct | 0.6 | 0.6 | 0.6 | 0.6 | 0.6 |
| Sep | 0.4 | 0.3 | 0.3 | 0.1 | 0.0 |
| AE ∆% Sep-Dec | 5.5 | 5.2 | 6.2 | 3.3 | 4.0 |
| Aug | 0.6 | 0.5 | 0.5 | 0.7 | 0.7 |
| Jul | 0.4 | 0.3 | 0.2 | 0.3 | 0.2 |
| Jun | 0.6 | 0.6 | 0.5 | 0.4 | 0.4 |
| May | 0.4 | 0.5 | 0.4 | 0.3 | 0.2 |
| Apr | 0.4 | 0.5 | 0.3 | 0.3 | 0.1 |
| AE ∆% Apr-Aug | 5.9 | 5.9 | 4.7 | 4.9 | 3.9 |
| Mar | 0.7 | 0.8 | 0.6 | 0.7 | 0.6 |
| Feb | 0.7 | 0.7 | 0.6 | 0.5 | 0.4 |
| Jan | 0.6 | 0.5 | 0.3 | 0.1 | -0.2 |
| AE ∆% Jan-Mar | 8.3 | 8.3 | 6.2 | 5.3 | 3.2 |
| 2013 | |||||
| Dec | 0.4 | 0.3 | 0.1 | 0.2 | 0.0 |
| AE ∆% Dec | 4.9 | 3.7 | 1.2 | 2.4 | 0.0 |
| Nov | 0.5 | 0.4 | 0.3 | 0.7 | 0.5 |
| AE ∆% Nov | 6.2 | 4.9 | 3.7 | 8.7 | 6.2 |
| Oct | -0.1 | -0.1 | -0.3 | 0.4 | 0.2 |
| AE ∆% Oct | -1.2 | -1.2 | -3.5 | 4.9 | 2.4 |
| Sep | 0.4 | 0.4 | 0.3 | 0.5 | 0.4 |
| Aug | 0.4 | 0.4 | 0.3 | 0.2 | 0.1 |
| Jul | 0.0 | 0.0 | -0.1 | 0.2 | 0.1 |
| Jun | 0.4 | 0.4 | 0.2 | 0.4 | 0.2 |
| May | 0.7 | 0.6 | 0.6 | 0.2 | 0.2 |
| Apr | 0.1 | 0.0 | 0.0 | -0.1 | 0.0 |
| AE ∆% Apr-Sep | 4.1 | 3.7 | 2.6 | 2.8 | 2.0 |
| Mar | 0.1 | 0.0 | 0.1 | -0.2 | -0.1 |
| Feb | 0.4 | 0.4 | 0.0 | 0.5 | 0.1 |
| AE ∆% Feb-Mar | 3.0 | 2.4 | 0.6 | 1.8 | 0.0 |
| Jan | -5.2 | -6.1 (0.1)a | -6.2 | 0.3 | 0.2 |
| AE ∆% Jan | -47.3 | -53.0 (3.7)a | -53.6 | 3.7 | 2.4 |
| 2012 | |||||
| ∆% Jan-Dec 2012*** | 8.5 | 8.6 | 6.8 | 3.3 | 2.3 |
| Dec | 2.6 | 2.6 (0.3)* | 2.6 (0.5)* | 0.2 | 0.2 |
| Nov | 1.2 | 1.2 (0.6)* | 1.3 (0.9)* | 0.2 | 0.3 |
| AE ∆% Nov-Dec | 25.3 | 25.3 (5.5)* | 26.0 (8.7)* | 2.4 | 3.0 |
| Oct | 0.9 | 0.9 | 0.6 | 0.1 | -0.2 |
| Sep | 0.9 | 0.8 | 0.5 | 0.7 | 0.4 |
| Aug | 0.2 | 0.2 | -0.2 | 0.2 | -0.2 |
| AE ∆% Aug-Oct | 8.3 | 7.9 | 3.7 | 4.1 | 0.0 |
| Jul | -0.2 | -0.2 | -0.3 | 0.3 | 0.3 |
| Jun | 0.2 | 0.2 | 0.2 | -0.1 | -0.1 |
| May | 0.0 | 0.0 | 0.1 | -0.1 | 0.0 |
| Apr | 0.4 | 0.4 | 0.3 | 0.3 | 0.1 |
| AE ∆% Apr-Jul | 1.2 | 1.2 | 0.9 | 1.2 | 0.9 |
| Mar | 0.5 | 0.5 | 0.3 | 0.1 | -0.1 |
| Feb | 0.8 | 0.8 | 0.6 | 0.6 | 0.4 |
| Jan | 0.7 | 1.0 | 0.7 | 0.7 | 0.4 |
| AE ∆% Jan-Mar | 8.3 | 9.6 | 4.9 | 4.3 | 2.1 |
| 2011 | |||||
| ∆% Jan-Dec 2011* | 5.1 | 4.1 | 1.6 | 3.7 | 1.8 |
| Dec | 0.8 | 0.8 | 0.8 | 0.0 | 0.0 |
| Nov | 0.0 | 0.0 | -0.1 | 0.0 | -0.1 |
| Oct | 0.1 | 0.1 | 0.1 | 0.3 | 0.3 |
| Sep | -0.1 | -0.1 | -0.3 | 0.4 | 0.3 |
| AE ∆% Sep-Dec | 2.4 | 2.4 | 1.5 | 2.1 | 1.5 |
| Aug | 0.2 | 0.2 | -0.1 | 0.2 | -0.1 |
| Jul | 0.6 | 0.6 | 0.4 | 0.5 | 0.3 |
| Jun | 0.5 | 0.5 | 0.4 | 0.2 | 0.2 |
| May | 0.3 | 0.3 | -0.1 | 0.3 | -0.1 |
| AE ∆% May-Aug | 4.9 | 4.9 | 1.8 | 3.7 | 0.9 |
| Apr | 0.2 | 0.2 | -0.3 | 0.4 | 0.0 |
| Mar | 0.2 | 0.2 | -0.1 | 0.7 | 0.3 |
| Feb | 0.5 | 0.6 | 0.3 | 0.4 | 0.1 |
| Jan | 1.6 | 0.7 | 0.5 | 0.4 | 0.1 |
| AE ∆% Jan-Apr | 7.7 | 5.2 | 1.2 | 5.9 | 1.5 |
| 2010 | |||||
| ∆% Jan-Dec 2010** | 5.2 | 4.3 | 2.9 | 4.4 | 2.9 |
| Dec | 0.9 | 0.9 | 0.7 | 0.3 | 0.1 |
| Nov | 0.5 | 0.5 | 0.3 | 0.5 | 0.4 |
| Oct | 0.5 | 0.5 | 0.2 | 0.7 | 0.5 |
| IVQ2010∆% | 1.9 | 1.9 | 1.2 | 1.5 | 1.0 |
| IVQ2010 AE ∆% | 7.9 | 7.9 | 4.9 | 6.2 | 4.1 |
Notes: *Excluding exceptional income gains in Nov and Dec 2012 because of anticipated tax increases in Jan 2013 ((page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). a Excluding employee contributions for government social insurance (pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf )Excluding NPI: current dollars personal income; NDPI: current dollars disposable personal income; RDPI: chained (2005) dollars DPI; NPCE: current dollars personal consumption expenditures; RPCE: chained (2005) dollars PCE; AE: annual equivalent; IVQ2010: fourth quarter 2010; A: annual equivalent
Percentage change month to month seasonally adjusted
*∆% Dec 2011/Dec 2010 **∆% Dec 2010/Dec 2009 *** ∆% Dec 2012/Dec 2011
Source: US Bureau of Economic http://bea.gov/iTable/index_nipa.cfm
Table IB-2 provides 12-month rates of growth of real disposable personal income (RDPI), real personal consumption expenditures (RPCE), real personal consumption expenditures in goods (RPCEG), real personal consumption expenditures in durable goods (RPCEGD) and real personal consumption expenditures of services (RPCES). The rates of growth of real disposable income decline in the final quarter of 2013 because of the increases in the last two months of 2012 in anticipation of the tax increases of the “fiscal cliff” episode. The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf).
The 12-month rate of increase of real disposable income fell to minus 1.3 percent in Oct 2013 and minus 2.4 percent in Nov 2013 partly because of the much higher level in late 2012 in anticipation of incomes to avoid increases in taxes in 2013. Real disposable income fell 4.8 percent in the 12 months ending in Dec 2013 primarily because of the much higher level in late 2012 in anticipation of income to avoid increases in taxes in 2013. Real disposable income increased 1.9 percent in the 12 months ending in Jan 2014, partly because of the low level in Jan 2013 after anticipation of incomes in late 2012 in avoiding the fiscal cliff episode. Real disposable income increased 2.1 percent in the 12 months ending in Feb 2018.
RPCE growth decelerated less sharply from close to 3 percent in IVQ2010 to 2.8 percent in Feb 2018. Subdued growth of RPCE could affect revenues of business. Growth rates of personal consumption have weakened in oscillations. Goods and especially durable goods have been driving growth of PCE as shown by the much higher 12-month rates of growth of real goods PCE (RPCEG) and durable goods real PCE (RPCEGD) than services real PCE (RPCES). Growth of consumption of goods and, in particular, of consumer durable goods drives the faster expansion of the economy while growth of consumption of services is much more moderate. The 12-month rates of growth of RPCEGD have fallen from around 10 percent and even higher in several months from Sep 2010 to Feb 2011 to the range of 5.6 to 8.2 percent from Feb 2017 to Feb 2018. RPCEG growth rates have fallen from around 5 percent late in 2010 and early Jan-Feb 2011 to the range of 3.1 to 5.0 percent from Feb 2017 to Feb 2018. In Feb 2018, RPCEG increased 4.3 percent in 12 months and RPCEGD 7.1 percent while RPCES increased 2.1 percent. There are limits to sustained growth based on financial repression in an environment of weak labor markets and real labor remuneration.
Table IB-2, Real Disposable Personal Income and Real Personal Consumption Expenditures
Percentage Change from the Same Month a Year Earlier %
| RDPI | RPCE | RPCEG | RPCEGD | RPCES | |
| 2018 | |||||
| Feb | 2.1 | 2.8 | 4.3 | 7.1 | 2.1 |
| Jan | 2.3 | 2.8 | 4.2 | 6.9 | 2.1 |
| 2017 | |||||
| Dec | 2.2 | 2.9 | 4.4 | 6.9 | 2.2 |
| Nov | 1.8 | 2.9 | 5.0 | 8.2 | 2.0 |
| Oct | 1.5 | 2.7 | 4.2 | 6.8 | 2.0 |
| Sep | 1.2 | 2.6 | 4.3 | 7.4 | 1.8 |
| Aug | 1.1 | 2.5 | 3.6 | 5.6 | 2.0 |
| Jul | 1.0 | 2.6 | 3.5 | 5.8 | 2.2 |
| Jun | 1.1 | 2.6 | 3.1 | 6.1 | 2.3 |
| May | 1.3 | 2.8 | 3.7 | 6.6 | 2.4 |
| Apr | 1.0 | 2.8 | 3.6 | 6.7 | 2.4 |
| Mar | 1.3 | 3.2 | 4.0 | 6.9 | 2.9 |
| Feb | 0.9 | 2.5 | 3.1 | 6.3 | 2.2 |
| Jan | 0.5 | 2.9 | 3.8 | 6.9 | 2.4 |
| 2016 | |||||
| Dec | 0.0 | 2.9 | 3.9 | 7.3 | 2.4 |
| Nov | 0.3 | 2.8 | 3.7 | 5.9 | 2.4 |
| Oct | 0.5 | 2.8 | 4.3 | 7.7 | 2.1 |
| Sep | 1.1 | 2.8 | 3.5 | 6.1 | 2.5 |
| Aug | 1.4 | 2.7 | 3.2 | 4.6 | 2.4 |
| Jul | 1.8 | 2.8 | 3.8 | 6.4 | 2.4 |
| Jun | 1.6 | 3.0 | 4.2 | 5.6 | 2.4 |
| May | 1.6 | 2.6 | 3.4 | 3.7 | 2.2 |
| Apr | 1.9 | 2.7 | 3.8 | 4.6 | 2.2 |
| Mar | 2.3 | 2.3 | 2.8 | 3.5 | 2.1 |
| Feb | 1.9 | 2.8 | 4.3 | 5.9 | 2.1 |
| Jan | 2.4 | 2.6 | 3.3 | 4.6 | 2.2 |
| 2015 | |||||
| Dec | 2.8 | 3.1 | 4.2 | 6.5 | 2.5 |
| Nov | 3.2 | 2.9 | 3.8 | 6.2 | 2.5 |
| Oct | 3.7 | 3.1 | 3.9 | 6.5 | 2.7 |
| Sep | 3.9 | 3.7 | 5.1 | 7.9 | 3.0 |
| Aug | 3.9 | 3.3 | 4.1 | 6.5 | 3.0 |
| Jul | 4.2 | 3.8 | 4.9 | 7.8 | 3.3 |
| Jun | 4.3 | 3.7 | 4.5 | 7.0 | 3.4 |
| May | 4.7 | 4.1 | 5.2 | 8.8 | 3.6 |
| Apr | 4.7 | 3.9 | 4.5 | 8.5 | 3.6 |
| Mar | 4.4 | 3.9 | 4.9 | 8.0 | 3.4 |
| Feb | 5.1 | 4.0 | 4.5 | 8.4 | 3.7 |
| Jan | 5.3 | 4.2 | 6.0 | 11.5 | 3.3 |
| 2014 | |||||
| Dec | 5.3 | 3.7 | 4.9 | 9.6 | 3.1 |
| Nov | 4.9 | 3.5 | 4.7 | 8.5 | 2.9 |
| Oct | 4.6 | 3.6 | 4.4 | 7.9 | 3.1 |
| Sep | 3.7 | 3.2 | 3.8 | 7.8 | 2.8 |
| Aug | 3.7 | 3.5 | 5.2 | 8.7 | 2.7 |
| Jul | 3.5 | 2.9 | 3.7 | 6.9 | 2.4 |
| Jun | 3.3 | 2.8 | 3.9 | 7.2 | 2.2 |
| May | 3.0 | 2.6 | 3.7 | 7.3 | 2.1 |
| Apr | 3.3 | 2.6 | 4.0 | 6.2 | 1.9 |
| Mar | 3.0 | 2.5 | 4.2 | 7.9 | 1.7 |
| Feb | 2.5 | 1.9 | 2.3 | 3.3 | 1.6 |
| Jan | 1.9 | 1.6 | 1.4 | 1.3 | 1.7 |
| 2013 | |||||
| Dec | -4.8 | 1.9 | 2.9 | 3.1 | 1.4 |
| Nov | -2.4 | 2.2 | 3.8 | 5.8 | 1.3 |
| Oct | -1.3 | 1.9 | 3.7 | 6.8 | 1.0 |
| Sep | -0.5 | 1.5 | 2.9 | 4.5 | 0.8 |
| Aug | -0.3 | 1.5 | 2.8 | 6.6 | 0.9 |
| Jul | -0.8 | 1.3 | 3.4 | 6.9 | 0.2 |
| Jun | -1.0 | 1.5 | 3.5 | 7.5 | 0.5 |
| May | -1.0 | 1.2 | 3.0 | 6.5 | 0.3 |
| Apr | -1.5 | 1.0 | 2.5 | 6.1 | 0.2 |
| Mar | -1.2 | 1.1 | 2.4 | 5.6 | 0.5 |
| Feb | -1.1 | 1.1 | 3.0 | 7.2 | 0.1 |
| Jan | -0.5 | 1.4 | 3.4 | 7.8 | 0.3 |
| 2012 | |||||
| Dec | 6.8 | 1.6 | 3.6 | 8.7 | 0.6 |
| Nov | 4.9 | 1.4 | 2.8 | 7.7 | 0.7 |
| Oct | 3.4 | 1.0 | 1.9 | 5.2 | 0.5 |
| Sep | 2.9 | 1.4 | 3.4 | 8.5 | 0.4 |
| Aug | 2.1 | 1.3 | 3.4 | 8.5 | 0.3 |
| Jul | 2.2 | 1.4 | 2.8 | 7.5 | 0.7 |
| Jun | 2.9 | 1.4 | 2.5 | 8.3 | 0.8 |
| May | 3.1 | 1.7 | 3.1 | 7.9 | 1.0 |
| Apr | 3.0 | 1.6 | 2.5 | 7.0 | 1.2 |
| Mar | 2.4 | 1.4 | 2.3 | 5.9 | 1.0 |
| Feb | 2.0 | 1.8 | 2.5 | 7.1 | 1.5 |
| Jan | 1.8 | 1.5 | 1.9 | 5.9 | 1.3 |
| Dec 2011 | 1.6 | 1.2 | 1.4 | 5.0 | 1.1 |
| Dec 2010 | 2.9 | 2.9 | 4.7 | 8.4 | 2.1 |
Notes: RDPI: real disposable personal income; RPCE: real personal consumption expenditures (PCE); RPCEG: real PCE goods; RPCEGD: RPCEG durable goods; RPCES: RPCE services
Numbers are percentage changes from the same month a year earlier
Source: US Bureau of Economic Analysis http://bea.gov/iTable/index_nipa.cfm
Chart IB-1 shows US real personal consumption expenditures (RPCE) between 1999 and 2017. There is an evident drop in RPCE during the global recession in 2007 to 2009 but the slope is flatter during the current recovery than in the period before 2007.
Chart IB-1, US, Real Personal Consumption Expenditures, Quarterly Seasonally Adjusted at Annual Rates 1999-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Percent changes from the prior period in seasonally adjusted annual equivalent quarterly rates (SAAR) of real personal consumption expenditures (RPCE) are in Chart IB-2 from 1995 to 2017. The average rate could be visualized as a horizontal line. Although there are not yet sufficient observations, it appears from Chart IB-2 that the average rate of growth of RPCE was higher before the recession than during the past thirty-one quarters of expansion that began in IIIQ2009.
Chart IB-2, Percent Change from Prior Period in Real Personal Consumption Expenditures, Quarterly Seasonally Adjusted at Annual Rates 1995-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Personal income and its disposition are in Table IB-3. The latest estimates and revisions have changed movements in nine forms. (1) Increase in Feb 2018 of personal income by 67.3 billion or 0.4 percent and increase of disposable income of $53.8 billion or 0.4 percent with increase of wages and salaries of 0.5 percent. (2) Increase of personal income of $691.8 billion from Dec 2016 to Dec 2017 or 4.3 percent and increase of disposable income of $553.4 billion or 3.9 percent with increase of wages and salaries of 5.3 percent. (3) Increase of personal income of $247.8 billion or 1.6 percent from Dec 2015 to Dec 2016 and increase of disposable income of $243.3 billion or 1.8 percent. Wages and salaries increased $64.5 billion or 0.8 percent. (4) Increase of personal income of $575.6 billion from Dec 2014 to Dec 2015 or 3.8 percent and increase of disposable income of $443.7 billion or 3.3 percent. Wages and salaries increased $369.9 billion or 4.8 percent. (5) Increase of personal income of $910.0 billion from Dec 2013 to Dec 2014 or 6.4 percent while disposable income increased $781.5 billion or 6.2 percent. Wages and salaries increased $419.7 billion or 5.8 percent. (6) Decrease of personal income of $329.0 billion from Dec 2012 to Dec 2013 or by 2.2 percent and decrease of disposable income of $442.5 billion or by 3.4 percent. Wages and salaries increased $60.7 billion from Dec 2012 to Dec 2013 or by 0.8 percent. Large part of these declines occurred because of the comparison of high levels in late 2012 in anticipation of tax increases in 2013. (7) In 2012, personal income increased $1150.5 billion or 8.5 percent while wages and salaries increased 7.5 percent and disposable income 8.6 percent. Significant part of these gains occurred in Dec 2012 in anticipation of incomes because of tax increases beginning in Jan 2013. (8) Increase of $656.0 billion of personal income in 2011 or by 5.1 percent with increase of wages and salaries of 2.7 percent and disposable income of 4.1 percent. (9) Increase of the rate of savings as percent of disposable income from 5.9 percent in Dec 2010 to 6.4 percent in Dec 2011 and 11.0 percent in Dec 2012, decreasing to 4.7 percent in Dec 2013. The savings rate increased to 6.1 percent in Dec 2014, decreasing to 5.8 percent in Dec 2015, 3.2 percent in Dec 2016, 2.4 percent in Dec 2017 and 3.2 percent in Jan 2018. The savings ratio increased to 3.4 percent in Feb 2018.
Table IB-3, US, Personal Income and its Disposition, Seasonally Adjusted at Annual Rates USD Billions
| Personal | Wages & | Personal | DPI | Savings | |
| Feb 2018 | 16,861.2 | 8,618.7 | 2,066.4 | 14,794.7 | 3.4 |
| Jan 2018 | 16,793.9 | 8,577.7 | 2,053.0 | 14,740.9 | 3.2 |
| Change Feb 2018/ Jan 2018 | 67.3 ∆% 0.4 | 41.0 ∆% 0.5 | 13.4 ∆% 0.7 | 53.8 ∆% 0.4 | |
| Dec 2017 | 16,719.1 | 8,527.7 | 2,120.9 | 14,598.2 | 2.4 |
| Change Dec 2017/ Dec 2016 | 691.8 ∆% 4.3 | 428.3 ∆% 5.3 | 138.4 ∆% 7.0 | 553.4 ∆% 3.9 | |
| Dec 2016 | 16,027.3 | 8,099.4 | 1,982.5 | 14,044.8 | 3.2 |
| Dec 2015 | 15,779.5 | 8,034.9 | 1,978.0 | 13,801.5 | 5.8 |
| Change Dec 2016/ Dec 2015 | 247.8 ∆% 1.6 | 64.5 ∆% 0.8 | 4.5 ∆% 0.2 | 243.3 ∆% 1.8 | |
| Dec 2015 | 15,779.5 | 8,034.9 | 1,978.0 | 13,801.5 | 5.8 |
| Change Dec 2015/Dec 2014 | 575.6 ∆% 3.8 | 369.9 ∆% 4.8 | 131.9 ∆% 7.1 | 443.7 ∆% 3.3 | |
| Dec 2014 | 15,203.9 | 7,665.0 | 1,846.1 | 13,357.8 | 6.1 |
| Change Dec 2014/Dec 2013 | 910.0 ∆% 6.4 | 419.7 ∆% 5.8 | 128.5 ∆% 7.5 | 781.5 ∆% 6.2 | |
| Dec 2013 | 14,293.9 | 7,245.3 | 1,717.6 | 12,576.3 | 4.7 |
| Dec 2012 | 14,622.9 | 7,184.6 | 1,604.1 | 13,018.8 | 11.0 |
| Change Dec 2013/ Dec 2012 | -329.0 ∆% -2.2 | 60.7 ∆% 0.8 | 113.5 ∆% 7.3 | -442.5 ∆% -3.4 | |
| Change Dec 2012/ Dec 2011 | 1150.5 ∆% 8.5 | 501.7 ∆% 7.5 | 120.3 ∆% 8.1 | 1030.2 ∆% 8.6 | |
| Dec 2011 | 13,472.4 | 6,682.9 | 1,483.8 | 11,988.6 | 6.4 |
| Dec 2010 | 12,816.4 | 6,506.0 | 1,301.9 | 11,514.5 | 5.9 |
| Change Dec 2011/ Dec 2010 | 656.0 ∆% 5.1 | 176.9 ∆% 2.7 | 181.9 ∆% 14.0 | 474.1 ∆% 4.1 |
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
US personal income and outlays since 1929 (http://www.bea.gov/iTable/index_nipa.cfm). Table IB-4 provides growth rates of real disposable income and real disposable income per capita in the long-term and selected periods. Real disposable income consists of after-tax income adjusted for inflation. Real disposable income per capita is income per person after taxes and inflation. There is remarkable long-term trend of growth of real disposable income of 3.1 percent per year on average from 1929 to 2017 and 2.0 percent in real disposable income per capita. Real disposable income increased at the average yearly rate of 3.7 percent from 1947 to 1999 and real disposable income per capita at 2.3 percent. These rates of increase broadly accompany rates of growth of GDP. Institutional arrangements in the United States provided the environment for growth of output and income after taxes, inflation and population growth. There is significant break of growth by much lower 2.3 percent for real disposable income on average from 1999 to 2017 and 1.4 percent in real disposable per capita income. Real disposable income grew at 3.5 percent from 1980 to 1989 and real disposable per capita income at 2.6 percent. In contrast, real disposable income grew at only 1.7 percent on average from 2006 to 2017 and real disposable income per capita at 0.9 percent. Real disposable income grew at 1.7 percent from 2007 to 2017 and real disposable income per capita at 0.9 percent. The United States has interrupted its long-term and cyclical dynamism of output, income and employment growth. Recovery of this dynamism could prove to be a major challenge. Cyclical uncommonly slow growth explains weakness in the current whole cycle instead of the allegation of secular stagnation.
Table IB-4, Average Annual Growth Rates of Real Disposable Income (RDPI) and Real Disposable Income per Capita (RDPIPC), Percent per Year
| RDPI Average ∆% | |
| 1929-2017 | 3.1 |
| 1947-1999 | 3.7 |
| 1999-2017 | 2.3 |
| 1999-2006 | 3.2 |
| 1980-1989 | 3.5 |
| 2006-2017 | 1.7 |
| 2007-2017 | 1.7 |
| RDPIPC Average ∆% | |
| 1929-2017 | 2.0 |
| 1947-1999 | 2.3 |
| 1999-2017 | 1.4 |
| 1999-2006 | 2.2 |
| 1980-1989 | 2.6 |
| 2006-2017 | 0.9 |
| 2007-2017 | 0.9 |
Source: Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-3 provides personal income in the US between 1980 and 1991. These data are not adjusted for inflation that was still high in the 1980s in the exit from the Great Inflation of the 1960s and 1970s (see http://cmpassocregulationblog.blogspot.com/2011/05/slowing-growth-global-inflation-great.html http://cmpassocregulationblog.blogspot.com/2011/04/new-economics-of-rose-garden-turned.html http://cmpassocregulationblog.blogspot.com/2011/03/is-there-second-act-of-us-great.html and Appendix I The Great Inflation; see Taylor 1993, 1997, 1998LB, 1999, 2012FP, 2012Mar27, 2012Mar28, 2012JMCB and http://cmpassocregulationblog.blogspot.com/2012/06/rules-versus-discretionary-authorities.html http://cmpassocregulationblog.blogspot.com/2014/07/financial-irrational-exuberance.html http://cmpassocregulationblog.blogspot.com/2014/07/world-inflation-waves-united-states.html). Personal income grew steadily during the 1980s after recovery from two recessions from Jan IQ1980 to Jul IIIQ1980 and from Jul IIIQ1981 to Nov IVQ1982. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm).
Chart IB-3, US, Personal Income, Billion Dollars, Quarterly Seasonally Adjusted at Annual Rates, 1980-1991
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
A different evolution of personal income is shown in Chart IB-4. Personal income also fell during the recession from Dec IVQ2007 to Jun IIQ2009 (http://www.nber.org/cycles.html). Growth of personal income during the expansion has been tepid even with the new revisions. In IVQ2012, nominal disposable personal income grew at the SAAR of 13.3 percent and real disposable personal income at 10.9 percent (Table 2.1 http://bea.gov/iTable/index_nipa.cfm). The BEA explains as follows: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf). The Bureau of Economic Analysis explains as (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3): “The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf).
In IQ2013, personal income fell at the SAAR of minus 11.0 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.9 percent (Table 14 at http://www.bea.gov/newsreleases/national/pi/2016/pdf/pi0616.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 5.9 percent, nominal disposable income at 5.5 percent and real disposable personal income at 4.2 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2014, personal income grew at 6.1 percent in nominal terms while nominal disposable income grew at 5.7 percent in nominal terms and at 5.9 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2015, nominal personal income grew at 4.1 percent while nominal disposable income grew at 2.6 percent and at 4.3 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIQ2015, nominal personal income grew at 5.7 percent while nominal disposable income grew at 5.6 percent and real disposable income grew at 3.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIIQ2015, nominal personal income grew at 2.9 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2015, nominal personal income grew at 3.7 percent while nominal disposable income grew at 3.1 percent and real disposable income at 2.9 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2016, personal income fell at 0.5 percent and fell at 2.1 percent excluding transfer receipts while nominal disposable income grew at 0.9 percent and real disposable income grew at 0.2 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf). In IIQ2016, personal income grew at 4.1 percent and at 2.2 percent excluding transfer receipts while nominal disposable income grew at 4.0 percent and real disposable income grew at 1.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf)). In IIIQ2016, personal income grew at 3.0 percent and at 1.3 percent excluding transfer receipts while nominal disposable income grew at 2.5 percent and real disposable income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2016, nominal personal income fell at 0.1 percent, decreasing at 2.6 percent excluding current transfers while disposable income grew at 0.1 percent and real disposable income decreased at 1.8 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IQ2017, nominal personal income grew at 5.6 percent and 3.4 percent excluding transfer receipts while nominal disposable income grew at 5.2 percent and real disposable income at 2.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIQ2017, nominal personal income grew at 2.3 percent and 2.4 percent excluding transfer receipts while nominal disposable income grew at 3.0 percent and real disposable income at 2.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIIQ2017, nominal personal income grew at 3.2 percent and at 1.7 percent excluding transfer receipts while nominal disposable income grew at 2.2 percent and real disposable personal income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2017, nominal personal income grew at 4.6 percent and at 2.3 percent excluding transfer receipts while nominal disposable income grew at 3.8 percent and real disposable personal income grew at 1.1 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf).
Chart IB-4, US, Personal Income, Current Billions of Dollars, Quarterly Seasonally Adjusted at Annual Rates, 2007-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Real or inflation-adjusted disposable personal income is in Chart IB-5 from 1980 to 1991. Real disposable income after allowing for taxes and inflation grew steadily at high rates during the entire decade. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm).
Chart IB-5, US, Real Disposable Income, Billions of Chained 2009 Dollars, Quarterly Seasonally Adjusted at Annual Rates 1980-1991
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-6 provides real disposable income from 2007 to 2017. In IVQ2012, nominal disposable personal income grew at the SAAR of 13.3 percent and real disposable personal income at 10.9 percent (Table 2.1 http://bea.gov/iTable/index_nipa.cfm). The BEA explains as follows: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf). The Bureau of Economic Analysis explains as (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3): “The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf). In IQ2013, personal income fell at the SAAR of minus 11.0 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.9 percent (Table 14 at http://www.bea.gov/newsreleases/national/pi/2016/pdf/pi0616.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 5.9 percent, nominal disposable income at 5.5 percent and real disposable personal income at 4.2 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2014, personal income grew at 6.1 percent in nominal terms while nominal disposable income grew at 5.7 percent in nominal terms and at 5.9 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2015, nominal personal income grew at 4.1 percent while nominal disposable income grew at 2.6 percent and at 4.3 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIQ2015, nominal personal income grew at 5.7 percent while nominal disposable income grew at 5.6 percent and real disposable income grew at 3.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIIQ2015, nominal personal income grew at 2.9 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2015, nominal personal income grew at 3.7 percent while nominal disposable income grew at 3.1 percent and real disposable income at 2.9 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2016, personal income fell at 0.5 percent and fell at 2.1 percent excluding transfer receipts while nominal disposable income grew at 0.9 percent and real disposable income grew at 0.2 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf). In IIQ2016, personal income grew at 4.1 percent and at 2.2 percent excluding transfer receipts while nominal disposable income grew at 4.0 percent and real disposable income grew at 1.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf)). In IIIQ2016, personal income grew at 3.0 percent and at 1.3 percent excluding transfer receipts while nominal disposable income grew at 2.5 percent and real disposable income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2016, nominal personal income fell at 0.1 percent, decreasing at 2.6 percent excluding current transfers while disposable income grew at 0.1 percent and real disposable income decreased at 1.8 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IQ2017, nominal personal income grew at 5.6 percent and 3.4 percent excluding transfer receipts while nominal disposable income grew at 5.2 percent and real disposable income at 2.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIQ2017, nominal personal income grew at 2.3 percent and 2.4 percent excluding transfer receipts while nominal disposable income grew at 3.0 percent and real disposable income at 2.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIIQ2017, nominal personal income grew at 3.2 percent and at 1.7 percent excluding transfer receipts while nominal disposable income grew at 2.2 percent and real disposable personal income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2017, nominal personal income grew at 4.6 percent and at 2.3 percent excluding transfer receipts while nominal disposable income grew at 3.8 percent and real disposable personal income grew at 1.1 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf).
Chart IB-6, US, Real Disposable Income, Billions of Chained 2009 Dollars, Quarterly Seasonally Adjusted at Annual Rates, 2007-2017
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-7 provides percentage quarterly changes in real disposable income from the preceding period at seasonally adjusted annual rates from 1980 to 1991. Rates of changes were high during the decade with few negative changes. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm).
Chart IB-7, US, Real Disposable Income Percentage Change from Preceding Period at Quarterly Seasonally-Adjusted Annual Rates, 1980-1991
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-8 provides percentage quarterly changes in real disposable income from the preceding period at seasonally adjusted annual rates from 2007 to 2017. There has been a period of positive rates followed by decline of rates and then negative and low rates in 2011. Recovery in 2012 has not reproduced the dynamism of the brief early phase of expansion. In IVQ2012, nominal disposable personal income grew at the SAAR of 13.3 percent and real disposable personal income at 10.9 percent (Table 2.1 http://bea.gov/iTable/index_nipa.cfm). The BEA explains as follows: “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf pages 1-2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0113.pdf). The Bureau of Economic Analysis explains as (http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf 2-3): “The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base.”
The increase was provided in the “fiscal cliff” law H.R. 8 American Taxpayer Relief Act of 2012 (http://www.gpo.gov/fdsys/pkg/BILLS-112hr8eas/pdf/BILLS-112hr8eas.pdf). In IQ2013, personal income fell at the SAAR of minus 11.0 percent; real personal income excluding current transfer receipts at minus 11.9 percent; and real disposable personal income at minus 15.9 percent (Table 14 at http://www.bea.gov/newsreleases/national/pi/2016/pdf/pi0616.pdf).The BEA explains as follows (page 3 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0313.pdf):
“The February and January changes in disposable personal income (DPI) mainly reflected the effect of special factors in January, such as the expiration of the “payroll tax holiday” and the acceleration of bonuses and personal dividends to November and to December in anticipation of changes in individual tax rates.”
In IIIQ2014, personal income grew at 5.9 percent, nominal disposable income at 5.5 percent and real disposable personal income at 4.2 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2014, personal income grew at 6.1 percent in nominal terms while nominal disposable income grew at 5.7 percent in nominal terms and at 5.9 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2015, nominal personal income grew at 4.1 percent while nominal disposable income grew at 2.6 percent and at 4.3 percent in real terms (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIQ2015, nominal personal income grew at 5.7 percent while nominal disposable income grew at 5.6 percent and real disposable income grew at 3.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IIIQ2015, nominal personal income grew at 2.9 percent while nominal disposable income grew at 3.2 percent and real disposable income grew at 1.8 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IVQ2015, nominal personal income grew at 3.7 percent while nominal disposable income grew at 3.1 percent and real disposable income at 2.9 percent (Table 14 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi0617.pdf). In IQ2016, personal income fell at 0.5 percent and fell at 2.1 percent excluding transfer receipts while nominal disposable income grew at 0.9 percent and real disposable income grew at 0.2 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf). In IIQ2016, personal income grew at 4.1 percent and at 2.2 percent excluding transfer receipts while nominal disposable income grew at 4.0 percent and real disposable income grew at 1.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2017/pdf/pi1117.pdf)). In IIIQ2016, personal income grew at 3.0 percent and at 1.3 percent excluding transfer receipts while nominal disposable income grew at 2.5 percent and real disposable income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2016, nominal personal income fell at 0.1 percent, decreasing at 2.6 percent excluding current transfers while disposable income grew at 0.1 percent and real disposable income decreased at 1.8 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IQ2017, nominal personal income grew at 5.6 percent and 3.4 percent excluding transfer receipts while nominal disposable income grew at 5.2 percent and real disposable income at 2.9 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIQ2017, nominal personal income grew at 2.3 percent and 2.4 percent excluding transfer receipts while nominal disposable income grew at 3.0 percent and real disposable income at 2.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IIIQ2017, nominal personal income grew at 3.2 percent and at 1.7 percent excluding transfer receipts while nominal disposable income grew at 2.2 percent and real disposable personal income grew at 0.7 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf). In IVQ2017, nominal personal income grew at 4.6 percent and at 2.3 percent excluding transfer receipts while nominal disposable income grew at 3.8 percent and real disposable personal income grew at 1.1 percent (Table 6 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0218.pdf).
Chart, IB-8, US, Real Disposable Income, Percentage Change from Preceding Period at Seasonally-Adjusted Annual Rates, 2007-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
The Bureau of Economic Analysis (BEA) estimates US personal income in Feb 2018 at the seasonally adjusted annual rate of $16,861.2 billion, as shown in Table IB-3 above (see Table 1 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0118.pdf). The major portion of personal income is compensation of employees of $10,615.7 billion, or 63.0 percent of the total. Wages and salaries are $8,618.7 billion, of which $7,249.8 billion by private industries and supplements to wages and salaries of $1,996.9 billion (contributions to social insurance are $626.4 billion). In Aug 1991 (at the comparable month after the 34th quarter of cyclical expansion), US personal income was $5,089.1 billion at SAAR (http://www.bea.gov/iTable/index_nipa.cfm). Compensation of employees was $3,465.3 billion, or 68.1 percent of the total. Wages and salaries were $2,823.0 billion of which $2,273.7 billion by private industries. Supplements to wages and salaries were $642.3 billion with employer contributions to pension and insurance funds of $426.2 billion and $216.1 billion to government social insurance. Chart IB-9 provides US wages and salaries by private industries in the 1980s and 1990-1991. Growth was robust after the interruption of the recessions. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm).
Chart IB-9, US, Wages and Salaries, Private Industries, Quarterly, Seasonally Adjusted at Annual Rates Billions of Dollars, 1980-1991
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
The Bureau of Economic Analysis (BEA) estimates US personal income in Feb 2018 at the seasonally adjusted annual rate of $16,861.2 billion, as shown in Table IB-3 above (see Table 1 at https://www.bea.gov/newsreleases/national/pi/2018/pdf/pi0118.pdf). The major portion of personal income is compensation of employees of $10,615.7 billion, or 63.0 percent of the total. Wages and salaries are $8,618.7 billion, of which $7,249.8 billion by private industries and supplements to wages and salaries of $1,996.9 billion (contributions to social insurance are $626.4 billion). Chart IB-10 provides US wages and salaries by private industries since 2007. Growth was mediocre in the weak expansion phase after IIIQ2009.
Chart IB-10, US, Wage and Salary Disbursement, Private Industries, Quarterly, Seasonally Adjusted at Annual Rates, Billions of Dollars 2007-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-11 provides finer detail with monthly wages and salaries of private industries from 2007 to 2018. Anticipations of income in late 2012 to avoid tax increases in 2013 cloud comparisons.
Chart IB-11, US, Wages and Salaries, Private Industries, Monthly, Seasonally Adjusted at Annual Rates, Billions of Dollars 2007-2018
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-12 provides monthly real disposable personal income per capita from 1980 to 1991. This is the ultimate measure of wellbeing in receiving income by obtaining the value per inhabitant. The measure cannot adjust for the distribution of income. Real disposable income per capita grew rapidly during the expansion after 1983 and continued growing during the rest of the decade. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm).
Chart IB-12, US, Real Disposable Per Capita Income, Monthly, Seasonally Adjusted at Annual Rates, Chained 2009 Dollars 1980-1991
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Table IB-5 provides the comparison between the cycle of the 1980s and the current cycle. Real per capita disposable income (RDPI-PC) increased 25.2 percent from Dec 1979 to Aug 1991. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (http://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.3 percent from the pre-recession peak of $8983.9 billion of chained 2009 dollars in IIIQ1990 to the trough of $8865.6 billion in IQ1991 (http://www.bea.gov/iTable/index_nipa.cfm). In the comparable period in the current cycle from Dec 2007 to Feb 2018, real per capita disposable income increased 10.2 percent.
Table IB-5, Percentage Changes of Real Disposable Personal Income Per Capita
| Month | RDPI-PC ∆% 12/79 | RDPI-PC ∆% YOY | Month | RDPI-PC ∆% 12/07 | RDPI-PC ∆% YOY |
| 11/1982 | 2.4 | 0.7 | 6/2009 | -0.6 | -2.4 |
| 12/1982 | 2.9 | 1.3 | 9/2009 | -1.3 | -0.6 |
| 12/1983 | 7.8 | 4.8 | 6/2010 | -0.4 | 0.2 |
| 12/1987 | 20.4 | 2.7 | 6/2014 | 4.2 | 2.5 |
| 1/1988 | 20.6 | 2.6 | 7/2014 | 4.3 | 2.7 |
| 2/1988 | 21.2 | 2.6 | 8/2014 | 4.8 | 3.0 |
| 3/1988 | 21.6 | 2.9 | 9/2014 | 5.0 | 3.0 |
| 4/1988 | 21.9 | 7.4 | 10/2014 | 5.5 | 3.8 |
| 5/1988 | 22.0 | 3.3 | 11/2014 | 6.0 | 4.1 |
| 6/1988 | 22.3 | 3.9 | 12/2014 | 6.5 | 4.5 |
| 7/1988 | 22.7 | 4.0 | 1/2015 | 6.8 | 4.6 |
| 8/1988 | 23.0 | 3.8 | 2/2015 | 7.1 | 4.3 |
| 9/1988 | 23.1 | 4.0 | 3/2015 | 7.0 | 3.6 |
| 10/1988 | 23.6 | 3.9 | 4/2015 | 7.5 | 3.9 |
| 11/1988 | 23.6 | 3.5 | 5/2015 | 7.9 | 3.9 |
| 12/1988 | 24.2 | 3.2 | 6/2015 | 8.0 | 3.6 |
| 1/1989 | 24.7 | 3.4 | 7/2015 | 7.9 | 3.4 |
| 2/1989 | 25.0 | 3.2 | 8/2015 | 8.1 | 3.1 |
| 3/1989 | 25.6 | 3.3 | 9/2015 | 8.3 | 3.1 |
| 4/1989 | 24.8 | 2.4 | 10/2015 | 8.6 | 3.0 |
| 5/1989 | 24.1 | 1.8 | 11/2015 | 8.6 | 2.4 |
| 6/1989 | 24.4 | 1.6 | 12/2015 | 8.6 | 2.0 |
| 7/1989 | 24.7 | 1.6 | 1/2016 | 8.5 | 1.6 |
| 8/1989 | 24.9 | 1.6 | 2/2016 | 8.4 | 1.2 |
| 9/1989 | 25.1 | 1.7 | 3/2016 | 8.6 | 1.5 |
| 10/1989 | 25.6 | 1.6 | 4/2016 | 8.8 | 1.1 |
| 11/1989 | 25.6 | 1.6 | 5/2016 | 8.8 | 0.9 |
| 12/1989 | 25.6 | 1.1 | 6/2016 | 8.9 | 0.9 |
| 1/1990 | 26.3 | 1.3 | 7/2016 | 9.0 | 1.1 |
| 2/1990 | 26.5 | 1.2 | 8/2016 | 8.8 | 0.7 |
| 3/1990 | 26.4 | 0.6 | 9/2016 | 8.6 | 0.4 |
| 4/1990 | 27.0 | 1.7 | 10/216 | 8.4 | -0.3 |
| 5/1990 | 26.6 | 1.9 | 11/2016 | 8.1 | -0.5 |
| 6/1990 | 26.7 | 1.9 | 12/2016 | 7.9 | -0.7 |
| 7/1990 | 27.0 | 1.8 | 1/2017 | 8.3 | -0.2 |
| 8/1990 | 26.1 | 0.9 | 2/2017 | 8.6 | 0.2 |
| 9/1990 | 25.9 | 0.6 | 3/2017 | 9.2 | 0.5 |
| 10/1990 | 24.8 | -0.7 | 4/2017 | 9.0 | 0.2 |
| 11/1990 | 24.7 | -0.8 | 5/2017 | 9.4 | 0.5 |
| 12/1990 | 25.2 | -0.3 | 06/2017 | 9.3 | 0.4 |
| 1/1991 | 24.7 | -1.2 | 07/2017 | 9.3 | 0.3 |
| 2/1991 | 24.8 | -1.4 | 08/2017 | 9.2 | 0.4 |
| 3/1991 | 24.9 | -1.2 | 09/2017 | 9.1 | 0.5 |
| 4/1991 | 25.2 | -1.4 | 10/2017 | 9.2 | 0.8 |
| 5/1991 | 25.0 | -1.2 | 11/2017 | 9.2 | 1.1 |
| 6/1991 | 25.5 | -0.9 | 12/2017 | 9.5 | 1.5 |
| 7/1991 | 25.1 | -1.5 | 1/2018 | 10.0 | 1.6 |
| 8/1991 | 25.2 | -0.7 | 2/2018 | 10.2 | 1.4 |
RDPI: Real Disposable Personal Income; RDPI-PC, Real Disposable Personal Income Per Capita
Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm
National Bureau of Economic Research
http://www.nber.org/cycles.html
Chart IB-13 provides monthly real disposable personal income per capita from 2007 to 2018. There was initial recovery from the drop during the global recession followed by relative cyclical weakness.
Chart IB-13, US, Real Disposable Per Capita Income, Monthly, Seasonally Adjusted at Annual Rates, Chained 2009 Dollars 2007-2018
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Table IB-6 provides data for analysis of the current cycle. Real disposable income (RDPI) increased 19.0 percent from Dec 2007 to Feb 2018 (column RDPI ∆% 12/07). In the same period, real disposable income per capita increased 10.2 percent (column RDPI-PC ∆% 12/07). The annual equivalent rate of increase of real disposable income per capita is 1.0 percent, only a fraction of 2.0 percent on average from 1929 to 2017, and 1.7 percent for real disposable income, much lower than 3.1 percent on average from 1929 to 2017.
Table IB-6, Percentage Changes of Real Disposable Personal Income and Real Disposable Personal Income Per Capita
| Month | RDPI | RDPI ∆% Month | RDPI ∆% YOY | RDPI-PC ∆% 12/07 | RDPI-PC ∆% Month | RDPI-PC ∆% YOY |
| 6/09 | 0.8 | -1.7 | -1.5 | -0.6 | -1.8 | -2.4 |
| 9/09 | 0.3 | 0.1 | 0.3 | -1.3 | 0.1 | -0.6 |
| 6/10 | 1.8 | 0.0 | 1.0 | -0.4 | 0.0 | 0.2 |
| 12/10 | 3.3 | 0.7 | 2.9 | 0.7 | 0.6 | 2.1 |
| 6/11 | 4.1 | 0.4 | 2.3 | 1.2 | 0.4 | 1.5 |
| 12/11 | 5.0 | 0.8 | 1.6 | 1.6 | 0.7 | 0.8 |
| 6/12 | 7.2 | 0.2 | 2.9 | 3.4 | 0.2 | 2.2 |
| 10/12 | 7.9 | 0.6 | 3.4 | 3.7 | 0.5 | 2.7 |
| 11/12 | 9.3 | 1.3 | 4.9 | 5.0 | 1.3 | 4.1 |
| 12/12 | 12.1 | 2.6 | 6.8 | 7.7 | 2.6 | 6.1 |
| 6/13 | 6.2 | 0.2 | -1.0 | 1.7 | 0.2 | -1.7 |
| 12/13 | 6.8 | 0.1 | -4.8 | 1.9 | 0.1 | -5.4 |
| 1/14 | 7.1 | 0.3 | 1.9 | 2.1 | 0.2 | 1.1 |
| 2/14 | 7.8 | 0.6 | 2.5 | 2.7 | 0.6 | 1.8 |
| 3/14 | 8.4 | 0.6 | 3.0 | 3.3 | 0.5 | 2.3 |
| 4/14 | 8.7 | 0.3 | 3.3 | 3.5 | 0.2 | 2.5 |
| 5/14 | 9.1 | 0.4 | 3.0 | 3.8 | 0.3 | 2.3 |
| 6/14 | 9.6 | 0.5 | 3.3 | 4.2 | 0.4 | 2.5 |
| 7/14 | 9.8 | 0.2 | 3.5 | 4.3 | 0.1 | 2.7 |
| 8/14 | 10.4 | 0.5 | 3.7 | 4.8 | 0.5 | 3.0 |
| 9/14 | 10.7 | 0.3 | 3.7 | 5.0 | 0.2 | 3.0 |
| 10/14 | 11.3 | 0.6 | 4.6 | 5.5 | 0.5 | 3.8 |
| 11/14 | 11.9 | 0.6 | 4.9 | 6.0 | 0.5 | 4.1 |
| 12/14 | 12.5 | 0.5 | 5.3 | 6.5 | 0.4 | 4.5 |
| 1/15 | 12.8 | 0.3 | 5.3 | 6.8 | 0.3 | 4.6 |
| 2/15 | 13.3 | 0.4 | 5.1 | 7.1 | 0.3 | 4.3 |
| 3/15 | 13.2 | -0.1 | 4.4 | 7.0 | -0.1 | 3.6 |
| 4/15 | 13.8 | 0.6 | 4.7 | 7.5 | 0.5 | 3.9 |
| 5/15 | 14.2 | 0.4 | 4.7 | 7.9 | 0.3 | 3.9 |
| 6/15 | 14.4 | 0.1 | 4.3 | 8.0 | 0.1 | 3.6 |
| 7/15 | 14.4 | 0.0 | 4.2 | 7.9 | -0.1 | 3.4 |
| 8/15 | 14.7 | 0.3 | 3.9 | 8.1 | 0.2 | 3.1 |
| 9/15 | 15.0 | 0.3 | 3.9 | 8.3 | 0.2 | 3.1 |
| 10/15 | 15.5 | 0.4 | 3.7 | 8.6 | 0.4 | 3.0 |
| 11/15 | 15.5 | 0.0 | 3.2 | 8.6 | 0.0 | 2.4 |
| 12/15 | 15.6 | 0.1 | 2.8 | 8.6 | 0.1 | 2.0 |
| 1/16 | 15.5 | -0.1 | 2.4 | 8.5 | -0.1 | 1.6 |
| 2/16 | 15.5 | -0.1 | 1.9 | 8.4 | -0.1 | 1.2 |
| 3/16 | 15.7 | 0.2 | 2.3 | 8.6 | 0.2 | 1.5 |
| 4/16 | 16.0 | 0.2 | 1.9 | 8.8 | 0.2 | 1.1 |
| 5/16 | 16.1 | 0.1 | 1.6 | 8.8 | 0.1 | 0.9 |
| 6/16 | 16.3 | 0.1 | 1.6 | 8.9 | 0.1 | 0.9 |
| 7/16 | 16.4 | 0.2 | 1.8 | 9.0 | 0.1 | 1.1 |
| 8/16 | 16.3 | -0.1 | 1.4 | 8.8 | -0.2 | 0.7 |
| 9/16 | 16.2 | -0.1 | 1.1 | 8.6 | -0.1 | 0.4 |
| 10/16 | 16.0 | -0.2 | 0.5 | 8.4 | -0.3 | -0.3 |
| 11/16 | 15.8 | -0.2 | 0.3 | 8.1 | -0.2 | -0.5 |
| 12/16 | 15.6 | -0.2 | 0.0 | 7.9 | -0.2 | -0.7 |
| 1/17 | 16.1 | 0.5 | 0.5 | 8.3 | 0.4 | -0.2 |
| 2/17 | 16.5 | 0.4 | 0.9 | 8.6 | 0.3 | 0.2 |
| 3/17 | 17.2 | 0.5 | 1.3 | 9.2 | 0.5 | 0.5 |
| 4/17 | 17.1 | -0.1 | 1.0 | 9.0 | -0.1 | 0.2 |
| 5/17 | 17.6 | 0.4 | 1.3 | 9.4 | 0.4 | 0.5 |
| 6/17 | 17.5 | -0.1 | 1.1 | 9.3 | -0.1 | 0.4 |
| 7/17 | 17.6 | 0.1 | 1.0 | 9.3 | 0.0 | 0.3 |
| 8/17 | 17.6 | 0.0 | 1.1 | 9.2 | -0.1 | 0.4 |
| 9/17 | 17.6 | 0.0 | 1.2 | 9.1 | -0.1 | 0.5 |
| 10/17 | 17.8 | 0.1 | 1.5 | 9.2 | 0.1 | 0.8 |
| 11/17 | 17.8 | 0.1 | 1.8 | 9.2 | 0.0 | 1.1 |
| 12/17 | 18.1 | 0.2 | 2.2 | 9.5 | 0.2 | 1.5 |
| 1/18 | 18.8 | 0.6 | 2.3 | 10.0 | 0.5 | 1.6 |
| 2/18 | 19.0 | 0.2 | 2.1 | 10.2 | 0.1 | 1.4 |
RDPI: Real Disposable Personal Income; RDPI-PC, Real Disposable Personal Income Per Capita
Source: US Bureau of Economic Analysis http://www.bea.gov/iTable/index_nipa.cfm
National Bureau of Economic Research
http://www.nber.org/cycles.html
IA2 Financial Repression. McKinnon (1973) and Shaw (1974) argue that legal restrictions on financial institutions can be detrimental to economic development. “Financial repression” is the term used in the economic literature for these restrictions (see Pelaez and Pelaez, Globalization and the State, Vol. II (2008b), 81-6; for historical analysis see the landmark exhaustive research by Summerhill (2015) and earlier research by Pelaez (1975)). Theory and evidence support the role of financial institutions in efficiency and growth (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 22-6, Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 37-44). Excessive official regulation frustrates financial development required for growth (Haber 2011). Emphasis on disclosure can reduce bank fragility and corruption, empowering investors to enforce sound governance (Barth, Caprio and Levine 2006). Banking was important in facilitating economic growth in historical periods (Cameron 1961, 1967, 1972; Cameron et al. 1992). Banking is also important currently because small- and medium-size business may have no other form of financing than banks in contrast with many options for larger and more mature companies that have access to capital markets. Calomiris and Haber (2014) find that broad voting rights and institutions restricting coalitions of bankers and populists ensure stable banking systems and access to credit. Summerhill (2015) contributes momentous solid facts and analysis with an ideal method combining economic theory, econometrics, international comparisons, data reconstruction and exhaustive archival research. Summerhill (2015) finds that Brazil committed to service of sovereign foreign and internal debt. Contrary to conventional wisdom, Brazil generated primary fiscal surpluses during most of the Empire until 1889 (Summerhill 2015, 37-8, Figure 2.1). Econometric tests by Summerhill (2015, 19-44) show that Brazil’s sovereign debt was sustainable. Sovereign credibility in the North-Weingast (1989) sense spread to financial development that provided the capital for modernization in England and parts of Europe (see Cameron 1961, 1967). Summerhill (2015, 3,194-6, Figure 7.1) finds that “Brazil’s annual cost of capital in London fell from a peak of 13.9 percent in 1829 to only 5.12 percent in 1889. Average rates on secured loans in the private sector in Rio, however, remained well above 12 percent through 1850.” Financial development would have financed diversification of economic activities, increasing productivity and wages and ensuring economic growth. Brazil restricted creation of limited liability enterprises (Summerhill 2015, 151-82) that prevented raising capital with issue of stocks and corporate bonds. Cameron (1961) analyzed how the industrial revolution in England spread to France and then to the rest of Europe. The Société Générale de Crédit Mobilier of Émile and Isaac Péreire provided the “mobilization of credit” for the new economic activities (Cameron 1961). Summerhill (2015, 151-9) provides facts and analysis demonstrating that regulation prevented the creation of a similar vehicle for financing modernization by Irineu Evangelista de Souza, the legendary Visconde de Mauá. Regulation also prevented the use of negotiable bearing notes of the Caisse Générale of Jacques Lafitte (Cameron 1961, 118-9). The government also restricted establishment and independent operation of banks (Summerhill 2015, 183-214). Summerhill (2005, 198-9) measures concentration in banking that provided economic rents or a social loss. The facts and analysis of Summerhill (2015) provide convincing evidence in support of the economic theory of regulation, which postulates that regulated entities capture the process of regulation to promote their self-interest. There appears to be a case that excessively centralized government can result in regulation favoring private instead of public interests with adverse effects on economic activity. The contribution of Summerhill (2015) explains why Brazil did not benefit from trade as an engine of growth—as did regions of recent settlement in the vision of nineteenth-century trade and development of Ragnar Nurkse (1959)—partly because of restrictions on financing and incorporation. Interest rate ceilings on deposits and loans have been commonly used. Professor Rondo E. Cameron, in his memorable A Concise Economic History of the World (Cameron 1989, 307-8), finds that “from a broad spectrum of possible forms of interaction between the financial sector and other sectors of the economy that requires its services, one can isolate three type-cases: (1) that in which the financial sector plays a positive, growth-inducing role; (2) that in which the financial sector is essentially neutral or merely permissive; and (3) that in which inadequate finance restricts or hinders industrial and commercial development.” Summerhill (1985) proves exhaustively that Brazil failed to modernize earlier because of the restrictions of an inadequate institutional financial arrangement plagued by regulatory capture for self-interest. The Banking Act of 1933 imposed prohibition of payment of interest on demand deposits and ceilings on interest rates on time deposits. These measures were justified by arguments that the banking panic of the 1930s was caused by competitive rates on bank deposits that led banks to engage in high-risk loans (Friedman, 1970, 18; see Pelaez and Pelaez, Regulation of Banks and Finance (2009b), 74-5). The objective of policy was to prevent unsound loans in banks. Savings and loan institutions complained of unfair competition from commercial banks that led to continuing controls with the objective of directing savings toward residential construction. Friedman (1970, 15) argues that controls were passive during periods when rates implied on demand deposit were zero or lower and when Regulation Q ceilings on time deposits were above market rates on time deposits. The Great Inflation or stagflation of the 1960s and 1970s changed the relevance of Regulation Q.
Most regulatory actions trigger compensatory measures by the private sector that result in outcomes that are different from those intended by regulation (Kydland and Prescott 1977). Banks offered services to their customers and loans at rates lower than market rates to compensate for the prohibition to pay interest on demand deposits (Friedman 1970, 24). The prohibition of interest on demand deposits was eventually lifted in recent times. In the second half of the 1960s, already in the beginning of the Great Inflation (DeLong 1997), market rates rose above the ceilings of Regulation Q because of higher inflation. Nobody desires savings allocated to time or savings deposits that pay less than expected inflation. This is a fact currently with near zero interest rates, 1½ to 1¾ percent, and consumer price inflation of 2.2 percent in the 12 months ending in Feb 2018 (http://www.bls.gov/cpi/) but rising during waves of carry trades from zero interest rates to commodity futures exposures (https://cmpassocregulationblog.blogspot.com/2018/03/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html). Funding problems motivated compensatory measures by banks. Money-center banks developed the large certificate of deposit (CD) to accommodate increasing volumes of loan demand by customers. As Friedman (1970, 25) finds:
“Large negotiable CD’s were particularly hard hit by the interest rate ceiling because they are deposits of financially sophisticated individuals and institutions who have many alternatives. As already noted, they declined from a peak of $24 billion in mid-December, 1968, to less than $12 billion in early October, 1969.”
Banks created different liabilities to compensate for the decline in CDs. As Friedman (1970, 25; 1969) explains:
“The most important single replacement was almost surely ‘liabilities of US banks to foreign branches.’ Prevented from paying a market interest rate on liabilities of home offices in the United States (except to foreign official institutions that are exempt from Regulation Q), the major US banks discovered that they could do so by using the Euro-dollar market. Their European branches could accept time deposits, either on book account or as negotiable CD’s at whatever rate was required to attract them and match them on the asset side of their balance sheet with ‘due from head office.’ The head office could substitute the liability ‘due to foreign branches’ for the liability ‘due on CDs.”
Friedman (1970, 26-7) predicted the future:
“The banks have been forced into costly structural readjustments, the European banking system has been given an unnecessary competitive advantage, and London has been artificially strengthened as a financial center at the expense of New York.”
In short, Depression regulation exported the US financial system to London and offshore centers. What is vividly relevant currently from this experience is the argument by Friedman (1970, 27) that the controls affected the most people with lower incomes and wealth who were forced into accepting controlled-rates on their savings that were lower than those that would be obtained under freer markets. As Friedman (1970, 27) argues:
“These are the people who have the fewest alternative ways to invest their limited assets and are least sophisticated about the alternatives.”
Chart IB-14 of the Bureau of Economic Analysis (BEA) provides quarterly savings as percent of disposable income or the US savings rate from 1980 to 2017. There was a long-term downward sloping trend from 12 percent in the early 1980s to 1.9 percent in Jul 2005. The savings rate then rose during the contraction and in the expansion. In 2011 and into 2012 the savings rate declined as consumption is financed with savings in part because of the disincentive or frustration of receiving a few pennies for every $10,000 of deposits in a bank. The savings rate increased in the final segment of Chart IB-14 in 2012 because of the “fiscal cliff” episode followed by another decline because of the pain of the opportunity cost of zero remuneration for hard-earned savings. There are multiple recent oscillations during expectations of increase or “liftoff” of the fed funds rate in the United States followed by “shallow” or uncertain monetary policy with increase in policy interest rates and reduction of the balance sheet of the Fed.
Chart IB-14, US, Personal Savings as a Percentage of Disposable Personal Income, Quarterly, 1980-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-14A provides the US personal savings rate, or personal savings as percent of disposable personal income, on an annual basis from 1929 to 2017. The US savings rate shows decline from around 10 percent in the 1960s to around 5 percent currently.
Chart IB-14A, US, Personal Savings as a Percentage of Disposable Personal Income, Annual, 1929-2017
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Table IB-7 provides personal savings as percent of disposable income and annual change of real disposable personal income in selected years since 1930. Savings fell from 4.4 percent of disposable personal income in 1930 to minus 0.8 percent in 1933 while real disposable income contracted 6.3 percent in 1930 and 2.9 percent in 1933. Savings as percent of disposable personal income swelled during World War II to 27.9 percent in 1944 with increase of real disposable income of 3.1 percent. Savings as percent of personal disposable income fell steadily over decades from 11.5 percent in 1982 to 2.6 percent in 2005. Savings as percent of disposable personal income was 5.0 percent in 2013 while real disposable income fell 1.4 percent. The savings rate was 5.7 percent of GDP in 2014 with growth of real disposable income of 3.6 percent. The savings rate was 6.1 percent in 2015 with growth of real disposable income of 4.2 percent. The savings rate stood at 4.9 percent in 2016 with growth of real disposable income at 1.2 percent.
The saving rate eased to 3.4 percent in 2017 with growth of real disposable income at 1.2 percent. The average ratio of savings as percent of disposable income fell from 9.3 percent in 1980 to 1989 to 5.3 percent on average from 2007 to 2017. Real disposable income grew on average at 3.2 percent from 1980 to 1989 and at 1.7 percent on average from 2007 to 2017.
Table IB-7, US, Personal Savings as Percent of Disposable Personal Income, Annual, Selected Years 1929-1913
| Personal Savings as Percent of Disposable Personal Income | Annual Change of Real Disposable Personal Income | |
| 1930 | 4.4 | -6.3 |
| 1933 | -0.8 | -2.9 |
| 1944 | 27.9 | 3.1 |
| 1947 | 6.3 | -4.1 |
| 1954 | 10.3 | 1.4 |
| 1958 | 11.4 | 1.1 |
| 1960 | 10.0 | 2.6 |
| 1970 | 12.6 | 4.6 |
| 1975 | 13.0 | 2.5 |
| 1982 | 11.5 | 2.1 |
| 1989 | 7.8 | 3.0 |
| 1992 | 8.9 | 4.3 |
| 2002 | 5.0 | 3.1 |
| 2003 | 4.8 | 2.7 |
| 2004 | 4.5 | 3.6 |
| 2005 | 2.6 | 1.5 |
| 2006 | 3.3 | 4.0 |
| 2007 | 2.9 | 2.1 |
| 2008 | 4.9 | 1.5 |
| 2009 | 6.1 | -0.4 |
| 2010 | 5.6 | 1.0 |
| 2011 | 6.0 | 2.5 |
| 2012 | 7.6 | 3.2 |
| 2013 | 5.0 | -1.4 |
| 2014 | 5.7 | 3.6 |
| 2015 | 6.1 | 4.2 |
| 2016 | 4.9 | 1.4 |
| 2017 | 3.4 | 1.2 |
| Average Savings Ratio | ||
| 1980-1989 | 9.3 | |
| 2007-2017 | 5.3 | |
| Average Yearly ∆% Real Disposable Income | ||
| 1980-1989 | 3.2 | |
| 2007-2017 | 1.7 |
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
Chart IB-15 of the US Bureau of Economic Analysis provides personal savings as percent of personal disposable income, or savings ratio, from Jan 2007 to Jan 2018.
Chart IB-15, US, Personal Savings as a Percentage of Disposable Income, Monthly 2007-2018
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
The uncertainties caused by the global recession resulted in sharp increase in the savings ratio that peaked at 7.9 percent in May 2008 (http://www.bea.gov/iTable/index_nipa.cfm). The second peak occurred at 8.1 percent in May 2009. There was another rising trend until 5.9 percent in Jun 2010 and then steady downward trend until 5.6 percent in Nov 2011. This was followed by an upward trend with 7.6 percent in Jun 2012 but decline to 7.1 percent in Aug 2012 followed by jump to 11.0 percent in Dec 2012. Swelling realization of income in Oct-Dec 2012 in anticipation of tax increases in Jan 2013 caused the jump of the savings rate to 11.0 percent in Dec 2012. The BEA explains as “Personal income in November and December was boosted by accelerated and special dividend payments to persons and by accelerated bonus payments and other irregular pay in private wages and salaries in anticipation of changes in individual income tax rates. Personal income in December was also boosted by lump-sum social security benefit payments” (page 2 at http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi1212.pdf). There was a reverse effect in Jan 2013 with decline of the savings rate to 4.9 percent. Real disposable personal income fell 6.2 percent and real disposable per capita income fell from $38,659 in Dec 2012 to $36,235 in Jan 2013 or by 6.3 percent (http://www.bea.gov/iTable/index_nipa.cfm), which is explained by the Bureau of Economic Analysis as follows (page 3 http://www.bea.gov/newsreleases/national/pi/2013/pdf/pi0213.pdf):
“Contributions for government social insurance -- a subtraction in calculating personal income --increased $6.4 billion in February, compared with an increase of $126.8 billion in January. The
January estimate reflected increases in both employer and employee contributions for government social insurance. The January estimate of employee contributions for government social insurance reflected the expiration of the “payroll tax holiday,” that increased the social security contribution rate for employees and self-employed workers by 2.0 percentage points, or $114.1 billion at an annual rate. For additional information, see FAQ on “How did the expiration of the payroll tax holiday affect personal income for January 2013?” at www.bea.gov. The January estimate of employee contributions for government social insurance also reflected an increase in the monthly premiums paid by participants in the supplementary medical insurance program, in the hospital insurance provisions of the Patient Protection and Affordable Care Act, and in the social security taxable wage base; together, these changes added $12.9 billion to January. Employer contributions were boosted $5.9 billion in January, which reflected increases in the social security taxable wage base (from $110,100 to $113,700), in the tax rates paid by employers to state unemployment insurance, and in employer contributions for the federal unemployment tax and for pension guaranty. The total contribution of special factors to the January change in contributions for government social insurance was $132.9 billion.”
Table IB-8, US, Savings Ratio and Real Disposable Income, % and ∆%
| Personal Saving as % Disposable Income | RDPI ∆% 12/07 | RDPI ∆% Month | RDPI ∆% YOY | |
| May 2008 | 7.9 | 5.1 | 4.8 | 5.7 |
| May 2009 | 8.1 | 2.5 | 1.6 | -2.5 |
| Jun 2010 | 5.9 | 1.8 | 0.0 | 1.0 |
| Nov 2011 | 5.6 | 4.2 | -0.1 | 1.5 |
| Jun 2012 | 7.6 | 7.2 | 0.2 | 2.9 |
| Aug 2012 | 7.1 | 6.7 | -0.2 | 2.1 |
| Dec 2012 | 11.0 | 12.1 | 2.6 | 6.8 |
| Jan 2013 | 4.9 | 5.2 | -6.2 | -0.5 |
| Feb 2013 | 4.7 | 5.1 | 0.0 | -1.1 |
| Mar 2013 | 4.8 | 5.2 | 0.1 | -1.2 |
| Apr 2013 | 4.9 | 5.3 | 0.0 | -1.5 |
| May 2013 | 5.3 | 5.9 | 0.6 | -1.0 |
| Jun 2013 | 5.4 | 6.2 | 0.2 | -1.0 |
| Jul 2013 | 5.2 | 6.1 | -0.1 | -0.8 |
| Aug 2013 | 5.4 | 6.4 | 0.3 | -0.3 |
| Sep 2013 | 5.3 | 6.7 | 0.3 | -0.5 |
| Oct 2013 | 4.8 | 6.4 | -0.3 | -1.3 |
| Nov 2013 | 4.6 | 6.7 | 0.3 | -2.4 |
| Dec 2013 | 4.7 | 6.8 | 0.1 | -4.8 |
| Jan 2014 | 5.1 | 7.1 | 0.3 | 1.9 |
| Feb 2014 | 5.4 | 7.8 | 0.6 | 2.5 |
| Mar 2014 | 5.4 | 8.4 | 0.6 | 3.0 |
| Apr 2014 | 5.5 | 8.7 | 0.3 | 3.3 |
| May 2014 | 5.7 | 9.1 | 0.4 | 3.0 |
| Jun 2014 | 5.9 | 9.6 | 0.5 | 3.3 |
| Jul 2014 | 5.8 | 9.8 | 0.2 | 3.5 |
| Aug 2014 | 5.6 | 10.4 | 0.5 | 3.7 |
| Sep 2014 | 5.8 | 10.7 | 0.3 | 3.7 |
| Oct 2014 | 5.8 | 11.3 | 0.6 | 4.6 |
| Nov 2014 | 5.8 | 11.9 | 0.6 | 4.9 |
| Dec 2014 | 6.1 | 12.5 | 0.5 | 5.3 |
| Jan 2015 | 6.1 | 12.8 | 0.3 | 5.3 |
| Feb 2015 | 6.3 | 13.3 | 0.4 | 5.1 |
| Mar 2015 | 5.8 | 13.2 | -0.1 | 4.4 |
| Apr 2015 | 6.2 | 13.8 | 0.6 | 4.7 |
| May 2015 | 6.2 | 14.2 | 0.4 | 4.7 |
| Jun 2015 | 6.3 | 14.4 | 0.1 | 4.3 |
| Jul 2015 | 6.0 | 14.4 | 0.0 | 4.2 |
| Aug 2015 | 6.0 | 14.7 | 0.3 | 3.9 |
| Sep 2015 | 6.0 | 15.0 | 0.3 | 3.9 |
| Oct 2015 | 6.3 | 15.5 | 0.4 | 3.7 |
| Nov 2015 | 6.1 | 15.5 | 0.0 | 3.2 |
| Dec 2015 | 5.8 | 15.6 | 0.1 | 2.8 |
| Jan 2016 | 5.9 | 15.5 | -0.1 | 2.4 |
| Feb 2016 | 5.5 | 15.5 | -0.1 | 1.9 |
| Mar 2016 | 5.7 | 15.7 | 0.2 | 2.3 |
| Apr 2016 | 5.5 | 16.0 | 0.2 | 1.9 |
| May 2016 | 5.4 | 16.1 | 0.1 | 1.6 |
| Jun 2016 | 5.1 | 16.3 | 0.1 | 1.6 |
| Jul 2016 | 5.1 | 16.4 | 0.2 | 1.8 |
| Aug 2016 | 4.9 | 16.3 | -0.1 | 1.4 |
| Sep 2016 | 4.5 | 16.2 | -0.1 | 1.1 |
| Oct 2016 | 4.1 | 16.0 | -0.2 | 0.5 |
| Nov 2016 | 3.7 | 15.8 | -0.2 | 0.3 |
| Dec 2016 | 3.2 | 15.6 | -0.2 | 0.0 |
| Jan 2017 | 3.7 | 16.1 | 0.5 | 0.5 |
| Feb 2017 | 4.1 | 16.5 | 0.4 | 0.9 |
| Mar 2017 | 3.9 | 17.2 | 0.5 | 1.3 |
| Apr 2017 | 3.7 | 17.1 | -0.1 | 1.0 |
| May 2017 | 3.8 | 17.6 | 0.4 | 1.3 |
| Jun 2017 | 3.6 | 17.5 | -0.1 | 1.1 |
| Jul 2017 | 3.5 | 17.6 | 0.1 | 1.0 |
| Aug 2017 | 3.5 | 17.6 | 0.0 | 1.1 |
| Sep 2017 | 3.0 | 17.6 | 0.0 | 1.2 |
| Oct 2017 | 2.9 | 17.8 | 0.1 | 1.5 |
| Nov 2017 | 2.5 | 17.8 | 0.1 | 1.8 |
| Dec 2017 | 2.4 | 18.1 | 0.2 | 2.2 |
| Jan 2018 | 3.2 | 18.8 | 0.6 | 2.3 |
| Feb 2018 | 3.4 | 19.0 | 0.2 | 2.1 |
Source: US Bureau of Economic Analysis
http://www.bea.gov/iTable/index_nipa.cfm
IIC. United States Balance of Payments Current Account and Net International Investment Position. The current account of the US balance of payments is in Table VI-3A for IVQ2016 and IVQ2017. The Bureau of Economic Analysis analyzes as follows (https://www.bea.gov/newsreleases/international/transactions/2018/pdf/trans417.pdf):
“The U.S. current-account deficit increased to $128.2 billion (preliminary) in the fourth quarter of 2017 from $101.5 billion (revised) in the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The deficit was 2.6 percent of current-dollar gross domestic product (GDP) in the fourth quarter, up from 2.1 percent in the third quarter.”
The US has a large deficit in goods or exports less imports of goods but it has a surplus in services that helps to reduce the trade account deficit or exports less imports of goods and services. The current account deficit of the US not seasonally adjusted increased from $111.9 billion in IVQ2016 to $126.5 billion in IVQ2017. The current account deficit seasonally adjusted at annual rate decreased from 2.4 percent of GDP in IVQ2016 to 2.1 percent of GDP in IIIQ2017, increasing to 2.6 percent of GDP in IVQ2017. The ratio of the current account deficit to GDP has stabilized below 3 percent of GDP compared with much higher percentages before the recession but is combined now with much higher imbalance in the Treasury budget (see Pelaez and Pelaez, The Global Recession Risk (2007), Globalization and the State, Vol. II (2008b), 183-94, Government Intervention in Globalization (2008c), 167-71). There is still a major challenge in the combined deficits in current account and in federal budgets.
Table VI-3A, US, Balance of Payments, Millions of Dollars NSA
| IVQ2016 | IVQ2017 | Difference | |
| Goods Balance | -192,971 | -215,103 | -22,132 |
| X Goods | 379,029 | 405,539 | 7.0 ∆% |
| M Goods | -572,000 | -623,642 | 9.0 ∆% |
| Services Balance | 60,996 | 62,041 | 1,045 |
| X Services | 188,320 | 199,460 | 5.9 ∆% |
| M Services | -127,325 | -137,419 | 7.9 ∆% |
| Balance Goods and Services | -131,975 | -153,062 | -21,087 |
| Exports of Goods and Services and Income Receipts | 815,899 | 889,568 | |
| Imports of Goods and Services and Income Payments | -927,774 | -1,016,026 | |
| Current Account Balance | -111,875 | -126,458 | -14,583 |
| % GDP | IVQ2016 | IVQ2017 | IIIQ2017 |
| 2.4 | 2.6 | 2.1 |
X: exports; M: imports
Balance on Current Account = Exports of Goods and Services – Imports of Goods and Services and Income Payments
Source: Bureau of Economic Analysis
http://www.bea.gov/international/index.htm#bop
In their classic work on “unpleasant monetarist arithmetic,” Sargent and Wallace (1981, 2) consider a regime of domination of monetary policy by fiscal policy (emphasis added):
“Imagine that fiscal policy dominates monetary policy. The fiscal authority independently sets its budgets, announcing all current and future deficits and surpluses and thus determining the amount of revenue that must be raised through bond sales and seignorage. Under this second coordination scheme, the monetary authority faces the constraints imposed by the demand for government bonds, for it must try to finance with seignorage any discrepancy between the revenue demanded by the fiscal authority and the amount of bonds that can be sold to the public. Suppose that the demand for government bonds implies an interest rate on bonds greater than the economy’s rate of growth. Then if the fiscal authority runs deficits, the monetary authority is unable to control either the growth rate of the monetary base or inflation forever. If the principal and interest due on these additional bonds are raised by selling still more bonds, so as to continue to hold down the growth of base money, then, because the interest rate on bonds is greater than the economy’s growth rate, the real stock of bonds will growth faster than the size of the economy. This cannot go on forever, since the demand for bonds places an upper limit on the stock of bonds relative to the size of the economy. Once that limit is reached, the principal and interest due on the bonds already sold to fight inflation must be financed, at least in part, by seignorage, requiring the creation of additional base money.”
The alternative fiscal scenario of the CBO (2012NovCDR, 2013Sep17) resembles an economic world in which eventually the placement of debt reaches a limit of what is proportionately desired of US debt in investment portfolios. This unpleasant environment is occurring in various European countries.
The current real value of government debt plus monetary liabilities depends on the expected discounted values of future primary surpluses or difference between tax revenue and government expenditure excluding interest payments (Cochrane 2011Jan, 27, equation (16)). There is a point when adverse expectations about the capacity of the government to generate primary surpluses to honor its obligations can result in increases in interest rates on government debt.
First, Unpleasant Monetarist Arithmetic. Fiscal policy is described by Sargent and Wallace (1981, 3, equation 1) as a time sequence of D(t), t = 1, 2,…t, …, where D is real government expenditures, excluding interest on government debt, less real tax receipts. D(t) is the real deficit excluding real interest payments measured in real time t goods. Monetary policy is described by a time sequence of H(t), t=1,2,…t, …, with H(t) being the stock of base money at time t. In order to simplify analysis, all government debt is considered as being only for one time period, in the form of a one-period bond B(t), issued at time t-1 and maturing at time t. Denote by R(t-1) the real rate of interest on the one-period bond B(t) between t-1 and t. The measurement of B(t-1) is in terms of t-1 goods and [1+R(t-1)] “is measured in time t goods per unit of time t-1 goods” (Sargent and Wallace 1981, 3). Thus, B(t-1)[1+R(t-1)] brings B(t-1) to maturing time t. B(t) represents borrowing by the government from the private sector from t to t+1 in terms of time t goods. The price level at t is denoted by p(t). The budget constraint of Sargent and Wallace (1981, 3, equation 1) is:
D(t) = {[H(t) – H(t-1)]/p(t)} + {B(t) – B(t-1)[1 + R(t-1)]} (1)
Equation (1) states that the government finances its real deficits into two portions. The first portion, {[H(t) – H(t-1)]/p(t)}, is seigniorage, or “printing money.” The second part,
{B(t) – B(t-1)[1 + R(t-1)]}, is borrowing from the public by issue of interest-bearing securities. Denote population at time t by N(t) and growing by assumption at the constant rate of n, such that:
N(t+1) = (1+n)N(t), n>-1 (2)
The per capita form of the budget constraint is obtained by dividing (1) by N(t) and rearranging:
B(t)/N(t) = {[1+R(t-1)]/(1+n)}x[B(t-1)/N(t-1)]+[D(t)/N(t)] – {[H(t)-H(t-1)]/[N(t)p(t)]} (3)
On the basis of the assumptions of equal constant rate of growth of population and real income, n, constant real rate of return on government securities exceeding growth of economic activity and quantity theory equation of demand for base money, Sargent and Wallace (1981) find that “tighter current monetary policy implies higher future inflation” under fiscal policy dominance of monetary policy. That is, the monetary authority does not permanently influence inflation, lowering inflation now with tighter policy but experiencing higher inflation in the future.
Second, Unpleasant Fiscal Arithmetic. The tool of analysis of Cochrane (2011Jan, 27, equation (16)) is the government debt valuation equation:
(Mt + Bt)/Pt = Et∫(1/Rt, t+τ)st+τdτ (4)
Equation (4) expresses the monetary, Mt, and debt, Bt, liabilities of the government, divided by the price level, Pt, in terms of the expected value discounted by the ex-post rate on government debt, Rt, t+τ, of the future primary surpluses st+τ, which are equal to Tt+τ – Gt+τ or difference between taxes, T, and government expenditures, G. Cochrane (2010A) provides the link to a web appendix demonstrating that it is possible to discount by the ex post Rt, t+τ. The second equation of Cochrane (2011Jan, 5) is:
MtV(it, ·) = PtYt (5)
Conventional analysis of monetary policy contends that fiscal authorities simply adjust primary surpluses, s, to sanction the price level determined by the monetary authority through equation (5), which deprives the debt valuation equation (4) of any role in price level determination. The simple explanation is (Cochrane 2011Jan, 5):
“We are here to think about what happens when [4] exerts more force on the price level. This change may happen by force, when debt, deficits and distorting taxes become large so the Treasury is unable or refuses to follow. Then [4] determines the price level; monetary policy must follow the fiscal lead and ‘passively’ adjust M to satisfy [5]. This change may also happen by choice; monetary policies may be deliberately passive, in which case there is nothing for the Treasury to follow and [4] determines the price level.”
An intuitive interpretation by Cochrane (2011Jan 4) is that when the current real value of government debt exceeds expected future surpluses, economic agents unload government debt to purchase private assets and goods, resulting in inflation. If the risk premium on government debt declines, government debt becomes more valuable, causing a deflationary effect. If the risk premium on government debt increases, government debt becomes less valuable, causing an inflationary effect.
There are multiple conclusions by Cochrane (2011Jan) on the debt/dollar crisis and Global recession, among which the following three:
(1) The flight to quality that magnified the recession was not from goods into money but from private-sector securities into government debt because of the risk premium on private-sector securities; monetary policy consisted of providing liquidity in private-sector markets suffering stress
(2) Increases in liquidity by open-market operations with short-term securities have no impact; quantitative easing can affect the timing but not the rate of inflation; and purchase of private debt can reverse part of the flight to quality
(3) The debt valuation equation has a similar role as the expectation shifting the Phillips curve such that a fiscal inflation can generate stagflation effects similar to those occurring from a loss of anchoring expectations.
This analysis suggests that there may be a point of saturation of demand for United States financial liabilities without an increase in interest rates on Treasury securities. A risk premium may develop on US debt. Such premium is not apparent currently because of distressed conditions in the world economy and international financial system. Risk premiums are observed in the spread of bonds of highly indebted countries in Europe relative to bonds of the government of Germany.
The issue of global imbalances centered on the possibility of a disorderly correction (Pelaez and Pelaez, The Global Recession Risk (2007), Globalization and the State Vol. II (2008b) 183-94, Government Intervention in Globalization (2008c), 167-71). Such a correction has not occurred historically but there is no argument proving that it could not occur. The need for a correction would originate in unsustainable large and growing United States current account deficits (CAD) and net international investment position (NIIP) or excess of financial liabilities of the US held by foreigners net relative to financial liabilities of foreigners held by US residents. The IMF estimated that the US could maintain a CAD of two to three percent of GDP without major problems (Rajan 2004). The threat of disorderly correction is summarized by Pelaez and Pelaez, The Global Recession Risk (2007), 15):
“It is possible that foreigners may be unwilling to increase their positions in US financial assets at prevailing interest rates. An exit out of the dollar could cause major devaluation of the dollar. The depreciation of the dollar would cause inflation in the US, leading to increases in American interest rates. There would be an increase in mortgage rates followed by deterioration of real estate values. The IMF has simulated that such an adjustment would cause a decline in the rate of growth of US GDP to 0.5 percent over several years. The decline of demand in the US by four percentage points over several years would result in a world recession because the weakness in Europe and Japan could not compensate for the collapse of American demand. The probability of occurrence of an abrupt adjustment is unknown. However, the adverse effects are quite high, at least hypothetically, to warrant concern.”
The United States could be moving toward a situation typical of heavily indebted countries, requiring fiscal adjustment and increases in productivity to become more competitive internationally. The CAD and NIIP of the United States are not observed in full deterioration because the economy is well below trend. There are two complications in the current environment relative to the concern with disorderly correction in the first half of the past decade. In the release of Jun 14, 2013, the Bureau of Economic Analysis (http://www.bea.gov/newsreleases/international/transactions/2013/pdf/trans113.pdf) informs of revisions of US data on US international transactions since 1999:
“The statistics of the U.S. international transactions accounts released today have been revised for the first quarter of 1999 to the fourth quarter of 2012 to incorporate newly available and revised source data, updated seasonal adjustments, changes in definitions and classifications, and improved estimating methodologies.”
The BEA introduced new concepts and methods (http://www.bea.gov/international/concepts_methods.htm) in comprehensive restructuring on Jun 18, 2014 (http://www.bea.gov/international/modern.htm):
“BEA introduced a new presentation of the International Transactions Accounts on June 18, 2014 and will introduce a new presentation of the International Investment Position on June 30, 2014. These new presentations reflect a comprehensive restructuring of the international accounts that enhances the quality and usefulness of the accounts for customers and bring the accounts into closer alignment with international guidelines.”
Table VI-3B provides data on the US fiscal and balance of payments imbalances incorporating all revisions and methods. In 2007, the federal deficit of the US was $161 billion corresponding to 1.1 percent of GDP while the Congressional Budget Office estimates the federal deficit in 2012 at $1087 billion or 6.8 percent of GDP. The estimate of the deficit for 2013 is $680 billion or 4.1 percent of GDP. The combined record federal deficits of the US from 2009 to 2012 are $5094 billion or 31.6 percent of the estimate of GDP for fiscal year 2012 implicit in the CBO (CBO 2013Sep11) estimate of debt/GDP. The deficits from 2009 to 2012 exceed one trillion dollars per year, adding to $5.094 trillion in four years, using the fiscal year deficit of $1087 billion for fiscal year 2012, which is the worst fiscal performance since World War II. Federal debt in 2007 was $5035 billion, slightly less than the combined deficits from 2009 to 2012 of $5094 billion. Federal debt in 2012 was 70.4 percent of GDP (CBO 2015Jan26) and 72.6 percent of GDP in 2013 (http://www.cbo.gov/). This situation may worsen in the future (CBO 2013Sep17):
“Between 2009 and 2012, the federal government recorded the largest budget deficits relative to the size of the economy since 1946, causing federal debt to soar. Federal debt held by the public is now about 73 percent of the economy’s annual output, or gross domestic product (GDP). That percentage is higher than at any point in U.S. history except a brief period around World War II, and it is twice the percentage at the end of 2007. If current laws generally remained in place, federal debt held by the public would decline slightly relative to GDP over the next several years, CBO projects. After that, however, growing deficits would ultimately push debt back above its current high level. CBO projects that federal debt held by the public would reach 100 percent of GDP in 2038, 25 years from now, even without accounting for the harmful effects that growing debt would have on the economy. Moreover, debt would be on an upward path relative to the size of the economy, a trend that could not be sustained indefinitely.
The gap between federal spending and revenues would widen steadily after 2015 under the assumptions of the extended baseline, CBO projects. By 2038, the deficit would be 6½ percent of GDP, larger than in any year between 1947 and 2008, and federal debt held by the public would reach 100 percent of GDP, more than in any year except 1945 and 1946. With such large deficits, federal debt would be growing faster than GDP, a path that would ultimately be unsustainable.
Incorporating the economic effects of the federal policies that underlie the extended baseline worsens the long-term budget outlook. The increase in debt relative to the size of the economy, combined with an increase in marginal tax rates (the rates that would apply to an additional dollar of income), would reduce output and raise interest rates relative to the benchmark economic projections that CBO used in producing the extended baseline. Those economic differences would lead to lower federal revenues and higher interest payments. With those effects included, debt under the extended baseline would rise to 108 percent of GDP in 2038.”
The CBO long-term budget on Mar 27, 2017, projects US federal debt at 150.0 percent of GDP in 2047 (Congressional Budget Office, The 2017 Long-term Budget Outlook. Washington, DC, Mar 30, 2017 https://www.cbo.gov/publication/52480).
Table VI-3B, US, Current Account, NIIP, Fiscal Balance, Nominal GDP, Federal Debt and Direct Investment, Dollar Billions and %
| 2007 | 2008 | 2009 | 2010 | 2011 | |
| Goods & | -705 | -709 | -384 | -495 | -549 |
| Primary Income | 85 | 130 | 115 | 168 | 211 |
| Secondary Income | -91 | -102 | -104 | -104 | -107 |
| Current Account | -711 | -681 | -373 | -431 | -445 |
| NGDP | 14478 | 14719 | 14419 | 14964 | 15518 |
| Current Account % GDP | -4.9 | -4.6 | -2.6 | -2.9 | -2.9 |
| NIIP | -1279 | -3995 | -2628 | -2512 | -4455 |
| US Owned Assets Abroad | 20705 | 19423 | 19426 | 21767 | 22209 |
| Foreign Owned Assets in US | 21984 | 23418 | 22054 | 24279 | 26664 |
| NIIP % GDP | -8.8 | -27.1 | -18.2 | -16.8 | -28.7 |
| Exports | 2559 | 2742 | 2283 | 2625 | 2983 |
| NIIP % | -50 | -145 | -115 | -95 | -149 |
| DIA MV | 5858 | 3707 | 4945 | 5486 | 5215 |
| DIUS MV | 4134 | 3091 | 3619 | 4099 | 4199 |
| Fiscal Balance | -161 | -459 | -1413 | -1294 | -1300 |
| Fiscal Balance % GDP | -1.1 | -3.1 | -9.8 | -8.7 | -8.5 |
| Federal Debt | 5035 | 5803 | 7545 | 9019 | 10128 |
| Federal Debt % GDP | 35.2 | 39.3 | 52.3 | 60.9 | 65.9 |
| Federal Outlays | 2729 | 2983 | 3518 | 3457 | 3603 |
| ∆% | 2.8 | 9.3 | 17.9 | -1.7 | 4.2 |
| % GDP | 19.1 | 20.2 | 24.4 | 23.4 | 23.4 |
| Federal Revenue | 2568 | 2524 | 2105 | 2163 | 2303 |
| ∆% | 6.7 | -1.7 | -16.6 | 2.7 | 6.5 |
| % GDP | 17.9 | 17.1 | 14.6 | 14.6 | 15.0 |
| 2012 | 2013 | 2014 | 2015 | 2016 | |
| Goods & | -537 | -462 | -490 | -500 | -505 |
| Primary Income | 207 | 206 | 210 | 181 | 173 |
| Secondary Income | -97 | -94 | -94 | -115 | -120 |
| Current Account | -426 | -350 | -374 | -434 | -452 |
| NGDP | 16155 | 16692 | 17428 | 18121 | 18625 |
| Current Account % GDP | -2.6 | -2.1 | -2.1 | -2.4 | -2.4 |
| NIIP | -4518 | -5373 | -6980 | -7493 | -8318 |
| US Owned Assets Abroad | 22562 | 24145 | 24832 | 23352 | 23849 |
| Foreign Owned Assets in US | 27080 | 29517 | 31813 | 30846 | 32168 |
| NIIP % GDP | -28.0 | -32.2 | -40.1 | -41.3 | -44.7 |
| Exports | 3096 | 3212 | 3333 | 3173 | 3157 |
| NIIP % | -146 | -167 | -209 | -236 | -263 |
| DIA MV | 5969 | 7121 | 7189 | 6999 | 7375 |
| DIUS MV | 4662 | 5815 | 6370 | 6701 | 7569 |
| Fiscal Balance | -1087 | -680 | -485 | -439 | -585 |
| Fiscal Balance % GDP | -6.8 | -4.1 | -2.8 | -2.4 | -3.2 |
| Federal Debt | 11281 | 11983 | 12780 | 13117 | 14168 |
| Federal Debt % GDP | 70.4 | 72.6 | 74.2 | 73.3 | 77.0 |
| Federal Outlays | 3537 | 3455 | 3506 | 3688 | 3853 |
| ∆% | -1.8 | -2.3 | 1.5 | 5.2 | 4.5 |
| % GDP | 22.1 | 20.9 | 20.4 | 20.6 | 20.9 |
| Federal Revenue | 2450 | 2775 | 3022 | 3250 | 3268 |
| ∆% | 6.4 | 13.3 | 8.9 | 7.6 | 0.5 |
| % GDP | 15.3 | 16.8 | 17.5 | 18.2 | 17.8 |
Sources:
Notes: NGDP: nominal GDP or in current dollars; NIIP: Net International Investment Position; DIA MV: US Direct Investment Abroad at Market Value; DIUS MV: Direct Investment in the US at Market Value. There are minor discrepancies in the decimal point of percentages of GDP between the balance of payments data and federal debt, outlays, revenue and deficits in which the original number of the CBO source is maintained. See Bureau of Economic Analysis, US International Economic Accounts: Concepts and Methods. 2014. Washington, DC: BEA, Department of Commerce, Jun 2014 http://www.bea.gov/international/concepts_methods.htm These discrepancies do not alter conclusions. Budget http://www.cbo.gov/
https://www.cbo.gov/about/products/budget-economic-data#6
https://www.cbo.gov/about/products/budget_economic_data#3
https://www.cbo.gov/about/products/budget-economic-data#2
https://www.cbo.gov/about/products/budget_economic_data#2 Balance of Payments and NIIP http://www.bea.gov/international/index.htm#bop Gross Domestic Product, Bureau of Economic Analysis (BEA) http://www.bea.gov/iTable/index_nipa.cfm
Table VI-3C provides quarterly estimates NSA of the external imbalance of the United States. The current account deficit seasonally adjusted at 2.4 percent in IVQ2016 stabilizes to 2.4 percent of GDP in IQ2017. The deficit increases to 2.6 percent in IIQ2017. The current account deficit decreased to 2.1 percent in IIIQ2017. The current account deficit increased to 2.6 percent in IVQ2017. The absolute value of the net international investment position decreases from minus $8.3 trillion in IVQ2016 to minus $8.1 trillion in IQ2017. The absolute value of the net international investment position decreases to minus $8.0 trillion in IIQ2017. The absolute value of the net international investment position decreased to $7.7 trillion in IIIQ2017. The absolute value of the net international investment position stabilizes at $7.8 trillion in IVQ2017. The BEA explains as follows (https://www.bea.gov/newsreleases/international/intinv/2018/pdf/intinv417.pdf):
“The U.S. net international investment position decreased to −$7,845.8 billion (preliminary) at the end of the fourth quarter from −$7,739.7 billion (revised) at the end of the third quarter, according to statistics released by the Bureau of Economic Analysis (BEA). The $106.1 billion decrease reflected a $727.2 billion increase in U.S. assets and an $833.3 billion increase in U.S. liabilities (table 1).”
The BEA explains further (https://www.bea.gov/newsreleases/international/intinv/2018/pdf/intinv417.pdf): “
“The $106.1 billion decrease in the net investment position reflected net financial transactions of –$52.4 billion and net other changes in position, such as price and exchange-rate changes, of –$53.8 billion (table A). The net investment position decreased 1.4 percent in the fourth quarter, compared with an increase of 3.3 percent in the third quarter. The net investment position decreased an average of 5.0 percent per quarter from the first quarter of 2011 through the second quarter of 2017.
“U.S. assets increased $727.2 billion to $27,632.8 billion at the end of the fourth quarter, mostly reflecting increases in portfolio investment and direct investment assets.
• Assets excluding financial derivatives increased $809.8 billion to $26,010.4 billion. The increase resulted from other changes in position of $658.8 billion and financial transactions of $151.0 billion (table A). Other changes in position mostly reflected (1) foreign equity price increases that raised the value of portfolio investment and direct investment equity assets and (2) the appreciation of major foreign currencies against the U.S. dollar that raised the value of foreign currency-denominated assets in dollar terms. Financial transactions mostly reflected net acquisition of portfolio investment debt securities and direct investment equity assets.
• Financial derivatives decreased $82.6 billion to $1,622.5 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.”
“U.S. liabilities increased $833.3 billion to $35,478.6 billion at the end of the fourth quarter, mostly reflecting increases in portfolio investment and direct investment liabilities.
· Liabilities excluding financial derivatives increased $910.5 billion to $33,884.4 billion. The increase resulted from other changes in position of $706.3 billion and financial transactions of $204.2 billion (table A). Other changes in position mostly reflected U.S. equity price increases that raised the value of portfolio investment and direct investment equity liabilities. Financial transactions reflected net incurrence of liabilities in all major investment categories.
· Financial derivatives decreased $77.1 billion to $1,594.2 billion, mostly in single-currency interest rate contracts and foreign exchange contracts.”
Table VI-3C, US, Current Account, Net International Investment Position and Direct Investment, Dollar Billions, NSA
| IVQ2016 | IQ2017 | IIQ2017 | IIIQ2017 | IVQ2017 | |
| Goods & | -132 | -113 | -155 | -147 | -153 |
| Primary Income | 51 | 49 | 51 | 59 | 58 |
| Secondary Income | -31 | -26 | -31 | -26 | -31 |
| Current Account | -112 | -90 | -136 | -114 | -126 |
| Current Account % GDP SA | -2.4 | -2.4 | -2.6 | -2.1 | -2.6 |
| NIIP | -8318 | -8092 | -8004 | -7740 | -7846 |
| US Owned Assets Abroad | 23849 | 24933 | 25853 | 26906 | 27633 |
| Foreign Owned Assets in US | -32168 | -33025 | -33857 | -34645 | -35479 |
| DIA MV | 7375 | 7895 | 8125 | 8595 | 8863 |
| DIA MV Equity | 6172 | 6609 | 6909 | 7347 | 7623 |
| DIUS MV | 7569 | 7952 | 8135 | 8454 | 8871 |
| DIUS MV Equity | 5784 | 6153 | 6341 | 6630 | 7055 |
Notes: NIIP: Net International Investment Position; DIA MV: US Direct Investment Abroad at Market Value; DIUS MV: Direct Investment in the US at Market Value. See Bureau of Economic Analysis, US International Economic Accounts: Concepts and Methods. 2014. Washington, DC: BEA, Department of Commerce, Jun 2014 http://www.bea.gov/international/concepts_methods.htm
Chart VI-3C of the US Bureau of Economic Analysis provides the quarterly and annual US net international investment position (NIIP) NSA in billion dollars. The NIIP deteriorated in 2008, improving in 2009-2011 followed by deterioration after 2012. There is improvement in 2017.
Chart VI-3C, US Net International Investment Position, NSA, Billion US Dollars
Source: Bureau of Economic Analysis
http://www.bea.gov/newsreleases/international/intinv/intinvnewsrelease.htm
© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018.
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