posted on 08 April 2017
Written by Steven Hansen
During the 1928 presidential campaign, Herbert Hoover promised “a chicken in every pot and a car in every garage." The vast majority in 2017 can afford the chicken and the car.
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Chicken has roughly doubled in price since 1980 whilst the CPI has gone up 4 times. Chicken is still affordable.
Used car prices are falling (even using current dollars as the metric). [below graph is not inflation adjusted]
Even inflation adjusted new car prices have been trending down.
And the proof is that registered cars on the road are returning toward pre-Great Recession highs.
Based on spending, there is no indication that the median consumer is under duress until one starts looking at income. From Voxeu:
Combine what has been conveyed on the above chart [declining income of the lowest 50% of income earners relative to the top 1%] with the knowledge that the median consumer's inflation adjusted income is still slightly below 2000 levels. From Sentier:
Source: Sentier Research
Putting It All Together It Does Not Add Up - Or Does It?
I am beginning to believe that the non-GDP economy is growing much faster than the economy overall. It could be enough to adjust GDP up 1% to 2%. After all, if you are shopping for clothes at the Salvation Army, buying existing homes, or visiting Shady Dan's Used Cars - your spending is unnoticed in GDP. Add to it the evolution into the sharing economy with the likes of Uber, Airbnb, TaskRabbit, et al which is not captured in GDP.
If one is short income, you search for alternatives. With few exceptions, there is little evidence that the lower end of the population is going without as cheaper non-GDP sources abound .
Other Economic News this Week:
The Econintersect Economic Index for April 2017 improvement trend continues although the value remains in the territory of weak growth. The index remains below the median levels seen since the end of the Great Recession. Six-month employment growth forecast indicates modest improvement in the rate of growth.
Bankruptcies this Week from bankruptcydata.com: Privately-held Angelica (f/k/a Angelica Healthcare and Angelica Image Apparel), Privately-held Payless (f/k/a Collective Brands)
Weekly Economic Release Scorecard:
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