Comments on: Has the US consumer shaken off the financial crisis? http://www.stubbornmule.net/2010/04/us-consumption-growth/ Obstinately objective Wed, 08 Feb 2012 01:46:02 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: Don’t Blame the Fed for Holding Back the Recovery – Trading 8s http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-26983 Don’t Blame the Fed for Holding Back the Recovery – Trading 8s Fri, 02 Sep 2011 17:41:28 +0000 http://www.stubbornmule.net/?p=2842#comment-26983 [...] Expenditures Price Index, which grew 1.6 percent in the last year, also lower than it was in the previous four decades. It’s not in the market’s expectations of future inflation, which is also less than 2 [...] [...] Expenditures Price Index, which grew 1.6 percent in the last year, also lower than it was in the previous four decades. It’s not in the market’s expectations of future inflation, which is also less than 2 [...]

]]> By: Stubborn Mule http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-8498 Stubborn Mule Fri, 09 Jul 2010 01:59:08 +0000 http://www.stubbornmule.net/?p=2842#comment-8498 <strong>Marco</strong> I would say that it's a bit of both. Interestingly, I've been reading <a href="http://amzn.to/9MEZUy" rel="nofollow">The Spirit Level</a> which talks about income inequality and it leads me to the view that income inequality can trigger greater consumption (to keep up with the Jones'), including by those who cannot afford it but if they have access to debt they can still spend. This would suggest that debt-driven financial crisis (and Minsky suggests most are of this type) are more likely in more unequal societies. Marco I would say that it’s a bit of both. Interestingly, I’ve been reading The Spirit Level which talks about income inequality and it leads me to the view that income inequality can trigger greater consumption (to keep up with the Jones’), including by those who cannot afford it but if they have access to debt they can still spend. This would suggest that debt-driven financial crisis (and Minsky suggests most are of this type) are more likely in more unequal societies.

]]> By: Marco aka Cracticus http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-8493 Marco aka Cracticus Thu, 08 Jul 2010 03:06:39 +0000 http://www.stubbornmule.net/?p=2842#comment-8493 Stubborn, I found this a couple of weeks ago and I remembered we had already talked about this: Inequality and Crises. http://krugman.blogs.nytimes.com/2010/06/28/inequality-and-crises/ Krugman sees a potential link between debt/financial crises, inequality and ideology. He considers that household debt may be due either to relatively lower income growth or over-consumption. What do you think? Stubborn,

I found this a couple of weeks ago and I remembered we had already talked about this:

Inequality and Crises.
http://krugman.blogs.nytimes.com/2010/06/28/inequality-and-crises/

Krugman sees a potential link between debt/financial crises, inequality and ideology.

He considers that household debt may be due either to relatively lower income growth or over-consumption. What do you think?

]]> By: The Mule trips up | Stubborn Mule http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7490 The Mule trips up | Stubborn Mule Wed, 21 Apr 2010 06:26:49 +0000 http://www.stubbornmule.net/?p=2842#comment-7490 [...] my last post, I fell into a common trap when dealing with financial time-series data: I did not adjust for [...] [...] my last post, I fell into a common trap when dealing with financial time-series data: I did not adjust for [...]

]]> By: Stubborn Mule http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7489 Stubborn Mule Wed, 21 Apr 2010 06:26:46 +0000 http://www.stubbornmule.net/?p=2842#comment-7489 I have now posted a <a href="http://www.stubbornmule.net/2010/04/the-mule-trips-up/" rel="nofollow">"real" consumption growth chart</a>. I have now posted a “real” consumption growth chart.

]]> By: Stubborn Mule http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7488 Stubborn Mule Wed, 21 Apr 2010 05:50:50 +0000 http://www.stubbornmule.net/?p=2842#comment-7488 Hmm. Reading the last couple of comments I realise that I have fallen into a trap for young time-series players. Personal consumption expenditure is measured in dollars, so looking at annual growth rates over time is not very sensible because inflation messes up the comparison. As James alludes to, inflation in the 1970s was high thanks to the oil price shocks and high inflation continued into the 80s. This means that some of the growth in personal consumption simply reflects higher prices not just people buying more "stuff". Fortunately, there is data available for this: the BEA also publishes a PCE chain-type price index (PCEPI) which aims to capture changing prices of consumption goods. While similar to CPI, the basket of goods used is somewhat different, aiming to align more closely with the items used in the PCE index itself. I will redo the growth chart using changes in "real" (i.e. inflation-adjusted) consumption. Hmm. Reading the last couple of comments I realise that I have fallen into a trap for young time-series players. Personal consumption expenditure is measured in dollars, so looking at annual growth rates over time is not very sensible because inflation messes up the comparison. As James alludes to, inflation in the 1970s was high thanks to the oil price shocks and high inflation continued into the 80s. This means that some of the growth in personal consumption simply reflects higher prices not just people buying more “stuff”. Fortunately, there is data available for this: the BEA also publishes a PCE chain-type price index (PCEPI) which aims to capture changing prices of consumption goods. While similar to CPI, the basket of goods used is somewhat different, aiming to align more closely with the items used in the PCE index itself. I will redo the growth chart using changes in “real” (i.e. inflation-adjusted) consumption.

]]> By: JamesGlover http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7487 JamesGlover Wed, 21 Apr 2010 05:14:42 +0000 http://www.stubbornmule.net/?p=2842#comment-7487 Was the principal driver in the 70s perhaps increases in fuel prices for family cars? Was the principal driver in the 70s perhaps increases in fuel prices for family cars?

]]> By: Marco http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7481 Marco Wed, 21 Apr 2010 00:27:55 +0000 http://www.stubbornmule.net/?p=2842#comment-7481 Stubborn, Reading your last reply to JamesGlover, I have to agree the last fall in consumption is quite eye-catching. But you know what really impresses me? The change in behavior from the 702-80s on. Mind you, growth in consumption is still quick. But it has moderated quite a fair bit, don't you think? Stubborn,

Reading your last reply to JamesGlover, I have to agree the last fall in consumption is quite eye-catching.

But you know what really impresses me? The change in behavior from the 702-80s on. Mind you, growth in consumption is still quick. But it has moderated quite a fair bit, don’t you think?

]]> By: Stubborn Mule http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7480 Stubborn Mule Tue, 20 Apr 2010 12:25:59 +0000 http://www.stubbornmule.net/?p=2842#comment-7480 <strong>Lefty: </strong>that's hard to say: a lot would depend on what the consumption is being spent on. If it's borrowed money spent on imports, it may not help unemployment too much. <strong>James: </strong>since the commentary here is about PCE growth (soaring, collapsing, etc), looking at the <em>level</em> of the first derivative is entirely appropriate, I would have thought. Lefty: that’s hard to say: a lot would depend on what the consumption is being spent on. If it’s borrowed money spent on imports, it may not help unemployment too much.

James: since the commentary here is about PCE growth (soaring, collapsing, etc), looking at the level of the first derivative is entirely appropriate, I would have thought.

]]> By: JamesGlover http://www.stubbornmule.net/2010/04/us-consumption-growth/comment-page-1/#comment-7479 JamesGlover Tue, 20 Apr 2010 12:21:32 +0000 http://www.stubbornmule.net/?p=2842#comment-7479 Now you are talking about changes in first derivative - not the same thing surely. Now you are talking about changes in first derivative – not the same thing surely.

]]>