Recession coming, but how serious?
Purple line is the median US family income in USD in real terms (corrected for inflation).
The red shaded areas are official inflation periods as given by Wikipedia. The USA defines a recessions as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sale".
Labour costs represent the greatest overheads for companies so it makes sense that when the economy is growing (inflationary), income goes up. Likewise when the economy contracts (deflationary), income will decrease due to reduced hours or other performance-related income loss.
As you can see real income was deflected at the resistance at the end of December 2016: that's right about the time Trump was elected. So in real terms, American families are already much worse off under him: I guess blame it on Obama, right?
How long will this recession last? I don't think I would bet against this downtrend right now.
The red shaded areas are official inflation periods as given by Wikipedia. The USA defines a recessions as "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sale".
Labour costs represent the greatest overheads for companies so it makes sense that when the economy is growing (inflationary), income goes up. Likewise when the economy contracts (deflationary), income will decrease due to reduced hours or other performance-related income loss.
As you can see real income was deflected at the resistance at the end of December 2016: that's right about the time Trump was elected. So in real terms, American families are already much worse off under him: I guess blame it on Obama, right?
How long will this recession last? I don't think I would bet against this downtrend right now.
Note
should read: The red shaded areas are official recession periods as given by Wikipedia.Note
Added Dow Jones in blue.... spot the trend Note
TrumponomicsHis tariffs have had a massive impact on US manufacturing, sending prices higher for many whilst allowing some, otherwise unprofitable industries, to restart production. These have been highly politicized industries like US steel and aluminium producers, whilst downstream manufacturers are now struggling to keep their doors open.
Higher prices have until now been passed on along the value chain, but until recently had only a minor effect on the consumer. The latest tariffs however are being levied directly against consumer products Made in China for the US market, the kind of stuff Walmart fills its shelves with. This is a risky. By doing so Trump is gambling that his supporters won't associated higher prices with his "war". Also 70% of the US economy is based on personal consumption. Either this guy has no idea what he is doing, or he indeed has a long-term vision. On a side note, the number of very different business ventures and failures he's associated with make him look like a risk taker and gambler.
Trump again calls for a 1% rate cut. Even if he got that, I'm sure he won't stop there. His goal seems to be to raise inflation, which would first and foremost help ease the $-debt burden held by the banks, which are now 90% of GDP. Particularly since most of these bank 'assets' are probably never going to be received. In 2007 commercial debt to GDP was only 70%
But what about wages? The last 50 years have seen the greatest transfer of market share in recorded history. We now live in a system where the wealthier you are the faster your wealth grows: images.app.goo.gl/73DxHt1G1LJXyUDr5
What was that about the rich paying their fair share?
So what is Trump's strategy to grow US wages? Remember the world is a zero sum game, if you are European or East Asian is it time to worry about your job?
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The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.