Among the early warnings I've seen for the 2008 financial crisis, this one is the earliest:
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| Graph #1: Personal Consumption Expenditures as a Percent of Disposable Personal Income |
That 2005 peak in spending is the earliest warning I can remember.
Makes sense, I guess, given that yesterday I discovered our mortgage interest payments don't come out of our disposable personal income (!) if you can believe that.
It was, after all, a "housing" crisis.
I notice also that the general downtrend (to the early 1970s) followed by uptrend does seem to match the path of personal saving (as a % of DPI) if you invert it. It all seems to work together.
Regarding that personal saving graph -- somebody should compare the WWII increase to the covid increase, and estimate the inflation we will have seen by the time prices "stabilize" again. Just to see if MV=PQ has any validity at all...
2 comments:
Here's a 2004 warning
Good one!
Should I think I'm not the only one keeping an eye out for early warnings of that crisis?
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