How All 'Consumer' Spending Since Lehman Was Actually Government Money By Another Name

[Rajiv]

How All 'Consumer' Spending Since Lehman Was Actually Government Money By Another Name

f you subtract out government transfer payments to Americans (such as unemployment checks) and lower taxes paid by Americans (due to breaks or lack of income), then you can wipe out all of the consumer spending growth since Lehman went bust in 2008.

Sans government support, there wouldn't have been any new spending, Econompic astutely highlights.

Own a small business dependent on the U.S. consumer right now? You might just have discovered yourself as a die-hard Keynesian. Not receiving much of the spending support shown below? Then here's your charitable donation for the decade:



(See Econompic for more, chart uses BEA and Federal Reserve Data)

[thunderdownunder]

Re: How All 'Consumer' Spending Since Lehman Was Actually Government Money By Another Name

Rajiv - you have proven yourself to be a an Intelligent person - Are you posing a question or are you just stating the obvious. It is unfolding just as it should unless they say QEII (and they dare not by obvious methods.) WE are all now all Roman citizens in the Colosseum. Something will die and you can be sure in the end it is the observers way of life that disappears.

[Rajiv]

Re: How All 'Consumer' Spending Since Lehman Was Actually Government Money By Another Name

Rajiv - you have proven yourself to be a an Intelligent person - Are you posing a question or are you just stating the obvious.

The implications of this chart are pretty obvious. Economic growth does not appear to be coming back. All that seems to have been accomplished is a torniquet that has prevented the patient from bleeding to death.

So QE-I does not appear to have worked to produce any growth in the real economy. The only growth in GDP that appears to have occurred is in the paper gains of FIRE. I doubt if QE-II will be any more successful. If that is indeed the case, then the question posed by Nate Hagen is a valid one - "Dear Candidate - What Will You Do if Growth Is Over...?"

Fig 1: Official and alternative scenarios for U.S. GDP growth

To me, one of the most surreal phenomena one encounters these days is that no country, no established economic research institute (that I'm aware of), and no international organization (such as the IMF) publicly discusses scenarios that don't plan for a return to stable economic (GDP) growth. Even Greece's government, after 2012, expects growth, which would allow the country to slowly reduce its monster debt load. Similarly, the U.S. government forecasts annual average (real) growth rates of 4.4% for the years 2012-2014, and 2.4% thereafter until 2020. This theme is globally ubiquitous. (ADDENDUM: Today Lloyds of London said global institutions are underestimating impacts of peak oil).





The above graph is one organization's view of the general magnitude of risks facing societies. Whether or not you agree with their projections is secondary to their ranking in mainstream discussions. On a long term horizon, clearly the health of our environment is of upmost importance. And, along with climate change and other potential externalities, resource depletion issues of various stripes pose large risks to the system as we know it. But before we face the long term we have to go through the short term, which will have to navigate the energy/debt/growth gauntlet. For all the effort being undertaken internationally to address climate, little if any is being made towards building bridges through and past a period of declining growth and wealth. Cognitive dissonance meet group think...

Given the stakes, it is quite worrying that in all the institutionalized economic projections of late, decline or zero growth aren't even mentioned as a possibility.
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[thriftyandboringinohio]

Re: How All 'Consumer' Spending Since Lehman Was Actually Government Money By Another Name

Discussions of the economy seem to avoid the word "wages". Without wages present and strong, the rest goes bad.