Remember 2008 and the financial crisis? Remember how the economy was slow for several years after that? They would show a graph of GDP rising on-trend, then suddenly falling below trend during the troubles, and then resuming a trend of increase, but at a lower level.
As you probably know, GDP was briefly good in 2021. People thought covid was over, and we felt pretty good about that.
The graph below shows GDI (Gross Domestic Income), which is just another measure of GDP:
 |
| Graph #1: Gross Domestic Income |
4 comments:
Too bad it was all just inflation.
Are you claiming the post-2008 era (the Summers era?) has ended? I want to believe, but all I hear is the sound of history "rhyming." Without doubt we are in another housing bubble. Perhaps also another dotcom bubble too, since the housing bubble is again most severe in the dotcommiest of neighborhoods. The one constant, of course, is that monetary policy is allowed, while fiscal policy (let alone economic policy) is completely out of the question.
Well, I was claiming that it was interesting... But then I realized I was thinking about economic growth, and if I'm thinking growth I should be looking at Real GDI. So then it became much less interesting. Silly me.
My first comment links to a graph of Real GDI. With inflation removed, there is no high point in 2021. Rather, the lower trend seems to continue to that point. And the 2022 data so far appears to be a little below that lower trend line. No good news there.
My graphs sometimes show things that look like strange policy decisions ("Let's do the same thing we did in 1954" or like that). But I can't see how that would be the case this time. The 2021 high is just how inflation worked out. That's not interesting at all, is it.
Hey, my replies to you tend to be long-winded. If it is too much let me know.
"The one constant, of course, is that monetary policy is allowed..."
And all they do is raise or lower interest rates. They don't even seem to realize that the consequences of raising rates are not the same when we use credit for growth (as we did in the 1950s) as they are when we use credit for everything (as we do now).
Yeah, you are right: The post is messed up.
Post a Comment