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Could you link something that supports your opinion? As for me: US consumer confidence surges in August to 18 year high. https://www.theguardian.com/business/2

Could you link something that supports your opinion? As for me: US consumer confidence surges in August to 18 year high. https://www.theguardian.com/business/2018/aug/29/us-economy-second-quarter-revised-report-figures https://www.theguardian.com/business/2018/aug/29/us-economy-.... Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline

simplemts 8y ago
"Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline" Debt, leverage, credit cards, loans, home equity lines, etc. Perhaps 2007 is a great teacher about overleveraged consumers "spending money in their pockets". It wasn't real, sustainable, and ended terribly.
craftyguy 8y ago
> Consumers wouldn't be spending if they didn't have extra cash in their pocket The entire credit industry would beg to differ.
tootie 8y ago
Wage data is well-tracked and is shown to be growing more slowly than inflation. It's possible the high growth in nominal wages are engendering some good feelings, but actual purchasing power is dropping. https://www.washingtonpost.com/amphtml/business/2018/07/12/inflation-hits-year-high-wiping-out-wage-gains-average-american/?noredirect=on https://www.washingtonpost.com/amphtml/business/2018/07/12/i...
- joefranklinsrs 8y ago
  My theory is that people are moving up to better jobs, after years of job training, education, and depressed demands, after 2008. Which would explain the low unemployment rate. Thus even though the wages for some industries are stagnating/declining, people are moving to better job positions, and thus have more money to spend.
  - tootie 8y ago
    Do you have data? That sounds like speculation. https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
  - sharemywin 8y ago
    Probably has nothing to do with all the credit consumers and businesses are running up: https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reach-4-trillion-by-the-end-of-2018.html https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reac... https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html?noredirect=on&utm_term=.2029cdea6184 https://www.washingtonpost.com/business/economy/beware-the-m...
    - adventured 8y ago
      No in fact it doesn't. American households are in tremendous shape compared to many of their peers. The household debt burden is at a 15 1/2 year low (household debt as a share of disposable income). [1] Unlike the fake boom of 2004-2008, this one isn't built on a large expansion of household debt. Businesses have levered up some, however business profits are at an all-time high and debt accumulation began to decline in the most recent quarter (the tax changes + Fed rate policies should continue to push toward a decline; companies like Microsoft, Apple and others took on immense debt temporarily to use it to pay out profits to shareholders via debt rather than repatriate their cash at a high tax rate). In fact, the single most interesting thing about this economic expansion, is that we haven't seen a big increase in household debt accumulation vs income, compared to the prior three major expansions (late 1980s, mid to late 1990s, and mid 2000s). That either implies consumers are skittish about unnecessarily taking on debt (trauma from the great recession, very plausible), or there's another very big leg left in this expansion (which would be fueled by debt). "With personal disposable incomes at a $15.46 trillion annual rate in the quarter, the debt-to-income ratio dipped to 86%. That’s the lowest, by an admittedly small amount, since the fourth quarter of 2002. At the height of the credit bubble in 2008, debts topped at 116% of disposable income." Household debt service payments as a share of disposable income is extremely low, near the lows of the last 40 years: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [1] https://www.marketwatch.com/story/households-in-best-position-to-handle-debt-in-nearly-16-years-2018-08-14 https://www.marketwatch.com/story/households-in-best-positio...
- refurb 8y ago
  What you should be looking at is total compensation. Wages plus non-wage benefits. It’s been growing over the last few decades and out pacing inflation. The down side is a lot of that is medical insurance where most people don’t see a benefit from the higher expenditure.
  - tootie 8y ago
    If medical costs go up, that factors in to inflation.
  - mikeash 8y ago
    Given that so much of it is medical insurance, why is that what you should be looking at?
    - deleted 8y ago
      [deleted]
    - austhrow743 8y ago
      Because you're still getting paid it.
      - mikeash 8y ago
        If it doesn’t make you better off, what’s the point?
        austhrow743 8y ago
        If paying more for medical care isn't getting you better medical care, making you being better off, then the problem is elsewhere. Not stagnant income.
        mikeash 8y ago
        The ultimate point here is that economic gains aren’t improving things for the average person. The exact reason for that is secondary.
- grandmczeb 8y ago
  While it's true that wage growth has been slower during since 2009 than in previous business cycles, it's false that real wages have actually gone down (it's up about 1-4% since the end of the last recession depending on how you measure[1]). Additionally, benefits have grown quite a bit over the long term, which makes looking at just wages misleading. If you look at total compensation, we've seen a 60% increase since the beginning of the 70s and about 30% since the 90s[2]. Slightly off topic, but I also found it interesting that net transfers (e.g. from the government) also make up a much larger percentage of total household income than they used to (growing from 5% in 1950 to about 17% now[3].) [1] https://fred.stlouisfed.org/graph/?g=l1e2 https://fred.stlouisfed.org/graph/?g=l1e2 [2] https://fred.stlouisfed.org/graph/?g=74dI https://fred.stlouisfed.org/graph/?g=74dI [3] https://fred.stlouisfed.org/graph/?g=7rNW https://fred.stlouisfed.org/graph/?g=7rNW
  - linkregister 8y ago
    Indeed the cost of benefits has risen precipitously while the value has dropped. White-collar professionals are insulated from this by a combination of much greater employer contribution ratios and a healthier risk pool. I had read an article claiming that the major source of government transfers were due to a much larger percentage of people being on Social Security disability. The causes are a mix of improvement in the enrollment process and a loss of jobs in regions that experience lower migration. I could be misremembering aspects of this so I won't be shocked if someone disputes this.
    - whoisthemachine 8y ago
      Anecdotally, I feel as though the trend amongst my friends and family has been that the cost of benefits has increased, while the benefits themselves have contracted. I'm lucky to work at a fairly young company where we get nice health insurance options, but even so, our sick leave policy leaves something to be desired.
ardy42 8y ago
>> The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising. > Could you link something that supports your opinion? This does: Are Superstar Firms and Amazon Effects Reshaping the Economy? (https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html https://www.nytimes.com/2018/08/25/upshot/big-corporations-i...) > The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so.
losteric 8y ago
> Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline Cash... or credit. Americans currently hold around $3.6 trillion in credit cards and auto/student loans - those types of credit can hinder long-term growth. And the CCI is not a predictive metric. Consumers don't consider the economy in their purchasing decisions unless the media has given them reason to be concerned... if they're even paying attention to news at all. I'm also curious how CCI is influenced by lowering expectations - if populations have been struggling to find jobs for the past 4 years, how do people answer?

simplemts 8y ago

"Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline" Debt, leverage, credit cards, loans, home equity lines, etc. Perhaps 2007 is a great teacher about overleveraged consumers "spending money in their pockets". It wasn't real, sustainable, and ended terribly.

craftyguy 8y ago

> Consumers wouldn't be spending if they didn't have extra cash in their pocket The entire credit industry would beg to differ.

tootie 8y ago

Wage data is well-tracked and is shown to be growing more slowly than inflation. It's possible the high growth in nominal wages are engendering some good feelings, but actual purchasing power is dropping. https://www.washingtonpost.com/amphtml/business/2018/07/12/inflation-hits-year-high-wiping-out-wage-gains-average-american/?noredirect=on https://www.washingtonpost.com/amphtml/business/2018/07/12/i...

joefranklinsrs 8y ago
My theory is that people are moving up to better jobs, after years of job training, education, and depressed demands, after 2008. Which would explain the low unemployment rate. Thus even though the wages for some industries are stagnating/declining, people are moving to better job positions, and thus have more money to spend.
- tootie 8y ago
  Do you have data? That sounds like speculation. https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx
- sharemywin 8y ago
  Probably has nothing to do with all the credit consumers and businesses are running up: https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reach-4-trillion-by-the-end-of-2018.html https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reac... https://www.washingtonpost.com/business/economy/beware-the-mother-of-all-credit-bubbles/2018/06/08/940f467c-69af-11e8-9e38-24e693b38637_story.html?noredirect=on&utm_term=.2029cdea6184 https://www.washingtonpost.com/business/economy/beware-the-m...
  - adventured 8y ago
    No in fact it doesn't. American households are in tremendous shape compared to many of their peers. The household debt burden is at a 15 1/2 year low (household debt as a share of disposable income). [1] Unlike the fake boom of 2004-2008, this one isn't built on a large expansion of household debt. Businesses have levered up some, however business profits are at an all-time high and debt accumulation began to decline in the most recent quarter (the tax changes + Fed rate policies should continue to push toward a decline; companies like Microsoft, Apple and others took on immense debt temporarily to use it to pay out profits to shareholders via debt rather than repatriate their cash at a high tax rate). In fact, the single most interesting thing about this economic expansion, is that we haven't seen a big increase in household debt accumulation vs income, compared to the prior three major expansions (late 1980s, mid to late 1990s, and mid 2000s). That either implies consumers are skittish about unnecessarily taking on debt (trauma from the great recession, very plausible), or there's another very big leg left in this expansion (which would be fueled by debt). "With personal disposable incomes at a $15.46 trillion annual rate in the quarter, the debt-to-income ratio dipped to 86%. That’s the lowest, by an admittedly small amount, since the fourth quarter of 2002. At the height of the credit bubble in 2008, debts topped at 116% of disposable income." Household debt service payments as a share of disposable income is extremely low, near the lows of the last 40 years: https://fred.stlouisfed.org/series/TDSP https://fred.stlouisfed.org/series/TDSP [1] https://www.marketwatch.com/story/households-in-best-position-to-handle-debt-in-nearly-16-years-2018-08-14 https://www.marketwatch.com/story/households-in-best-positio...
refurb 8y ago
What you should be looking at is total compensation. Wages plus non-wage benefits. It’s been growing over the last few decades and out pacing inflation. The down side is a lot of that is medical insurance where most people don’t see a benefit from the higher expenditure.
- tootie 8y ago
  If medical costs go up, that factors in to inflation.
- mikeash 8y ago
  Given that so much of it is medical insurance, why is that what you should be looking at?
  - deleted 8y ago
    [deleted]
  - austhrow743 8y ago
    Because you're still getting paid it.
    - mikeash 8y ago
      If it doesn’t make you better off, what’s the point?
      - austhrow743 8y ago
        If paying more for medical care isn't getting you better medical care, making you being better off, then the problem is elsewhere. Not stagnant income.
        mikeash 8y ago
        The ultimate point here is that economic gains aren’t improving things for the average person. The exact reason for that is secondary.
grandmczeb 8y ago
While it's true that wage growth has been slower during since 2009 than in previous business cycles, it's false that real wages have actually gone down (it's up about 1-4% since the end of the last recession depending on how you measure[1]). Additionally, benefits have grown quite a bit over the long term, which makes looking at just wages misleading. If you look at total compensation, we've seen a 60% increase since the beginning of the 70s and about 30% since the 90s[2]. Slightly off topic, but I also found it interesting that net transfers (e.g. from the government) also make up a much larger percentage of total household income than they used to (growing from 5% in 1950 to about 17% now[3].) [1] https://fred.stlouisfed.org/graph/?g=l1e2 https://fred.stlouisfed.org/graph/?g=l1e2 [2] https://fred.stlouisfed.org/graph/?g=74dI https://fred.stlouisfed.org/graph/?g=74dI [3] https://fred.stlouisfed.org/graph/?g=7rNW https://fred.stlouisfed.org/graph/?g=7rNW
- linkregister 8y ago
  Indeed the cost of benefits has risen precipitously while the value has dropped. White-collar professionals are insulated from this by a combination of much greater employer contribution ratios and a healthier risk pool. I had read an article claiming that the major source of government transfers were due to a much larger percentage of people being on Social Security disability. The causes are a mix of improvement in the enrollment process and a loss of jobs in regions that experience lower migration. I could be misremembering aspects of this so I won't be shocked if someone disputes this.
  - whoisthemachine 8y ago
    Anecdotally, I feel as though the trend amongst my friends and family has been that the cost of benefits has increased, while the benefits themselves have contracted. I'm lucky to work at a fairly young company where we get nice health insurance options, but even so, our sick leave policy leaves something to be desired.

ardy42 8y ago

>> The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising. > Could you link something that supports your opinion? This does: Are Superstar Firms and Amazon Effects Reshaping the Economy? (https://www.nytimes.com/2018/08/25/upshot/big-corporations-influence-economy-central-bank.html https://www.nytimes.com/2018/08/25/upshot/big-corporations-i...) > The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so.

losteric 8y ago

> Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline Cash... or credit. Americans currently hold around $3.6 trillion in credit cards and auto/student loans - those types of credit can hinder long-term growth. And the CCI is not a predictive metric. Consumers don't consider the economy in their purchasing decisions unless the media has given them reason to be concerned... if they're even paying attention to news at all. I'm also curious how CCI is influenced by lowering expectations - if populations have been struggling to find jobs for the past 4 years, how do people answer?