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The Structural Decline Of US GDP In 4 Charts
Much is made of the expected hockey-stick - any quarter now - in US GDP growth (whether it's a lower fiscal drag or rise in CAPEX or any range of miracle-driven hope factors).
Credit Suisse is not so sure; not just in the short-term, but in the long-term of the potential for US GDP growth. They note that basic growth accounting provides links between potential GDP to the size of the labor force, its productivity, and the capital assets – both public and private – it has available to work with. The problem - longer-term for the US, is, as CS notes, the following four exhibits collectively speak to the recent slowdown in potential, and do not augur positively for future growth.
Exhibit 1 shows that ‘trend” productivity growth has slowed significantly – perhaps to less than 1%, from a local peak of about 3½% at the height of the late 90s technology boom.
Exhibit 2 plots the labor force participation rate, which has declined sharply. The demographics of an aging population will continue putting downward pressure on participation.
Exhibit 3 displays net business investment – or gross investment adjusted for depreciation – as a share of GDP. Think of this as a proxy for capital accumulation. This ratio fell to multi-decade lows in the wake of the Great Recession, and the rebound since has been tepid. Slower growth in capital accumulation today is a downside factor for productivity in future years.
Exhibit 4 shows public investment as a share of GDP, a proxy for public infrastructure spending. The 2009 federal stimulus bill supported infrastructure spending for a time in 2009 and 2010, but since then it has declined sharply as state and local finances deteriorated.
Charts: Credit Suisse
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Bonus Chart:
http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=A103600001&f=M
GDP = God Damn Ponzi
and yes it's structural
@cdad: Someone posted that chart a couple/few months ago. I remember thinking, "That cannot be." Because ... if that's the straight poop, things are even worse than the most pessimistic doom and gloomer on this forum is saying. Frankly, it is almost unbelievable. (Gasoline sales down 65-70% in the last few years?!? Holy shit!)
Damn! Of course O will take credit for that. Hybrids, you know.
Too bad they can't separate out gasoline usage inside the Beltway relative to the rest of the US.
Holy shit!! I knew gasoline use was way down but GASOLINE USE WAS CUT IN HALF IN JUST THE PAST FOUR YEARS!?
I just filled up six 5 gallon gasoline storage cans (and I didn't forget the Sta-Bil) for those unexpected/unplanned winter events up here on the mountain. So you should see the chart recover next month.
/sarc
Combine the decline in gasoline sales w/the decline in the labor force participation rate, and you have most of the explanation.
On second thought, dont combine those 2....could be a volatile mix.
Yeah, sorry, I started using diesel.
Print
Gotta love love chart porn. Especially yesterday's bearish engulfing candle just waiting for confirmation.
SCOTTY!! FIND A QUICK WAY TO BURN GOVERNMENT CASH!!!
SPOCK!!! HIRE AS MANY PEOPLE AS YOU CAN!! SEND OUT EVERY AWAY TEAM WE'VE GOT TO RECRUIT PEOPLE!!!
McKOY!! REPLICATE AS MUCH DOLLARS AS YOU CAN AND ADD IT TO THE GDP!!!!
DAMNED KIRK!!! I'M A DOCTOR, NOT A FEDERAL RESERVE GUY!!!
What exactly do we manufacture again? As far as I can tell it looks like financial "products" of mass destruction are becoming more and more of the GDP. Hhmmm, I think I see the problem.
Roll the mother fucking guillotines.
Nothing changes otherwise.
Until then;
Long physical PMs for saving
Long bitcoin and other peer-to-peer networks for transactions
long sharecropping and a dependable tribe.
Short all paper
Please continue with your guillotine quote with every post. I also believe its the only way now.
I'm pretty sure America still makes that thingy that goes into that pointy stuff to goed inside that bomb pointed to Russia.... but all the rest and the spare parts come from china.
Halarious, that so many still consider the recession over as of 2009. Hell, looking at those charts I would say we were just getting started. The exception being business investment, which looks about ready to roll over for round three of a one way ticket to the shit house.
This is all about control, period. Control the language and the message and you control sheeple.
09? Take a deeper look. The depression started in 2000, it's been masked over by debt since then. I would argue it started in 1969 when we were at our industrial peek. Nixon taking us off of what was left of the gold standard, and the continuous pulling forward of economic activity through the accumulation of debt has given us the illusion of prosperity.
.....and the occasional MIC sponsored Woar helped to re-inject the slowing ponzi with much needed "economic activity", the cycle was approx. every 20 years but as the each Woars stimulating effect lessened the Woars needed to happen quicker, now it looks like the MIC-nSSA-.Gov complex needs a Woar less than every 5 years.
They would have actually had a better result if they did use helicopters and gave money to people to spend instead of bankers to stash into stocks.
We have to abandon this constant analysis and accept that the only answer is to BELIEVE! As our economy is based on confidence (in the worst possible definition of a confidence scheme) and factually we are completely fucked, it should be obvious to all that the only answer is full on delusion. This is what our leaders have been telling us for years. Do not look behind the curtain. Do not watch your wife of thirty years undress. Not if you want to believe. Is there anything we can do about speeding up the legalization of drugs? This is getting harder to maintain by the day.
Too real. Drone's on the way. Sit tight.
Do not watch your wife of thirty years undress.
nailed it ! but sadly the same can be said of us, never stand in front of a three way mirror
oh the horror!
But TPTB can never stomach giving ordinary people money....only to the rich....and let it trickle down....
Those charts show that without any shadow of doubt the US economy is totally fucked, with no cure. There is no fucking way now that they can get out the mineshaft they have dug (unless they find gold in it).
This printing Must go on forever, and in ever increasing amounts...
This is why Germany is making a mess of things...if they recover...well how does that make the USA look. Germany is meant to be in the same silliness doing the same stupidity so nobody can tell who is the biggest clown.
The USA is now going to have trouble just feeding its people.
includes QE
https://www.youtube.com/watch?v=qK6ftzkX7xc
This is the scary data
Interest Expense on the Debt Outstanding - USA2013 $415,688,781,248.40
2012 $359,796,008,919.49
2011 $454,393,280,417.03
2010 $413,954,825,362.17
2009 $383,071,060,815.42
2008 $451,154,049,950.63
2007 $429,977,998,108.20
2006 $405,872,109,315.83
2005 $352,350,252,507.90
2004 $321,566,323,971.29
2003 $318,148,529,151.51
2002 $332,536,958,599.42
2001 $359,507,635,242.41
2000 $361,997,734,302.36
1999 $353,511,471,722.87
1998 $363,823,722,920.26
1997 $355,795,834,214.66
1996 $343,955,076,695.15
1995 $332,413,555,030.62
1994 $296,277,764,246.26
1993 $292,502,219,484.25
1992 $292,361,073,070.74
1991 $286,021,921,181.04
1990 $264,852,544,615.90
1989 $240,863,231,535.71
1988 $214,145,028,847.73
Take away ZIRP and what happens?
Tax Revenue is what? $2.5trillion?
What happens is USG10YR goes to 5 or 6%?
America can't afford higher rates. USA is boxed in.
"The Federal Reserve is boxed in." - FIXED. The USA is a mix of all kinds of people, assets, and resources with numerous options (once the kleptocrats/fascists and their political puppets in washington are executed).
hedge accordingly.
The Federal Reserve is the creditor here.
The people of America owe $4 trillion to the Federal Reserve.
It's America that needs to pay the debt (or revolve it forever).
When fraud is the status quo, possession is the law. Owe a bank a few thousand and you have a problem, owe them 4 trillion and they have a problem. You also better think about how you define money. Please, I have been bartering and using other means to conduct transactions around the farm since the mid 90's.
Yes, very sure that The Fed is in big trouble, although I'll admit that even physical dollars might have some value in a post fed world. Remember, the "dollar" has already changed forms several times.
It's a confidence game, once confidence is lost, game over.
We don't actually pay much in the way of net interest on the debt the Fed owns. It is paid back to the US government. That is another reason why it will never be sold back into the market. The real issue is the quantity of money being created and masked by this phoney debt accounting. It is all just a giant printfest. The money being created by the Fed is completely unsanitized with no real debt backing. Infact, you can make a case for the interest we are supposed to pay on Fed owned debt being kicked back as accounting profit to the US government. But again, it is all flat out printed before running through an accounting game.
Correct, the Fed has no real assets, other than your future labor, that's it. Although they do have connections to a pretty decent military, so I hear.
The Fed "claims" on their balance sheet to "own" approx 270 million oz of gold. Trouble for the Fed though is that gold is not in their physical possession. Ironic, aint it?
"We don't actually pay much in the way of net interest on the debt the Fed owns."
Partly true... AFTER the Fed's operational expenses are covered AND a 6% dividend is paid to the private banks that own the stock in the 12 District Banks of the Fed. In today's interest rate environment, a 6% yield is some nice vig.
dont underestimate the power of desperation.
Wall St. EXTORTS THE FED........
Please, wall street is the fucking Fed.
Much worse depression than the thirties with a much better paintjob.
That cheap paint job is about to peel off and reveal the fact that the majority of Americans don't know how survive anywhere close to those in the 1930's!
Plus there wasn't any of the "Big Brother" police state technology we have today to try and suppress the masses revolting when it falls apart.
Well how else are you going to pay bankers stupid bonuses for doing a crap job. The money has to come from somewhere as they MAKE NOTHING USEFUL. We had a chance to allow the failed investment bank controled economy to reset...instead we printed the crooks $5 Trillion dollars and gave them the biggest windfall of lower rates EVER!
They lie about labor statistics.
They lie about GDP.
Who fucking cares?????
Go make a profitable trade and mama's going to be very happy.
http://www.marketwatch.com/story/yellen-defends-qe3-in-letters-to-senators-2013-11-19-1391598
WASHINGTON (MarketWatch) -- A "strong majority" on the Federal Reserve's policy-setting committee believes that the central bank's unprecedented asset purchase programs have been effective, said Janet Yellen, President Barack Obama's nominee to be the first chairwoman of the central bank. In response to a written question from Sen. David Vitter, a Louisiana Republican, Yellen said the benefits of asset purchases continue to outweigh the costs. The letters were released on Tuesday. Yellen repeated the Fed's statement that asset purchases are "not on a preset course" and the decision on whether to reduce the pace of the purchases will remain contingent on the economic outlook and the Fed's assessment of the costs and benefits. In a separate letter to Sen. Elizabeth Warren, a Democrat from Massachusetts, Yellen said that Fed policy would likely remain very easy for a long time after the unemployment rate falls below the central bank's 6.5% interest rate hike threshold.
These submissions are why I keep coming back to ZH.