Dona Ferentes
Pengurus pengatur
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Lacy Hunt:
"....well. I think that the national accounts do suggest the economy is growing well, but the national accounts have a major disconnect in the United States, and there's good reason for why they shouldn't be doing well. We've recently constructed a weighted and detrended money supply aggregate for the United States, China, Japan, the EU, and the United Kingdom. This aggregate over the last four years is declining very, very sharply.
So, when you look at actual M2 growth for the last four years versus detrended, we're substantially in negative territory. What that means is that the economy is far below what we would call the stationary growth rate, the STR, and it is very substantially negative. It suggests that the economy is going to experience a sustained period of subpar economic growth and declining inflation. That's the condition. Now, normally, when you have a severe monetary contraction, the sequence is that first of all, the money growth comes down and then you get a deceleration in economic activity and then you get a deceleration in inflation. That's the pattern. There's virtually hardly any exceptions to that rule.
Money leads, GDP is coincident, and the inflation rate is lagging. That, by the way, is the case in the four major foreign economies. Money growth has collapsed. It's brought down economic activity in Japan, China, the EU, and the UK. In the United States, we've had a collapse in monetary growth on the terms in the way in which I measure it. We've had a dramatic deceleration in inflation, what I would call a contra-normal cyclical development. You've had the inflation rate come down without the GDP declining, and that doesn't usually work that way. Now, in economics, quantity effects and price effects both convey knowledge. When economic conditions are weakening, you expect to see the broad volumetric measures to deteriorate.
But when economic activity is weakening, you experience a sharp decline in the inflation rate. Well, the inflation rate has dropped more than it typically does during a recession and immediately after with the GDP still rising. I think that what we're witnessing is a very broad and very basic disconnect between the national accounts and many measures of the economy.
Take for example, one of the things that we've always been able to do for this economy is we've had affordable homes and cars for the vast majority of our people. Yet if you look at the vehicle sales, the new home sales, existing home sales, they're all down very substantially from their peaks of the last five years. Vehicle sales in the teens. Existing and new home sales down in the 35% to 40% range. Very, very broad disconnect.
"....well. I think that the national accounts do suggest the economy is growing well, but the national accounts have a major disconnect in the United States, and there's good reason for why they shouldn't be doing well. We've recently constructed a weighted and detrended money supply aggregate for the United States, China, Japan, the EU, and the United Kingdom. This aggregate over the last four years is declining very, very sharply.
So, when you look at actual M2 growth for the last four years versus detrended, we're substantially in negative territory. What that means is that the economy is far below what we would call the stationary growth rate, the STR, and it is very substantially negative. It suggests that the economy is going to experience a sustained period of subpar economic growth and declining inflation. That's the condition. Now, normally, when you have a severe monetary contraction, the sequence is that first of all, the money growth comes down and then you get a deceleration in economic activity and then you get a deceleration in inflation. That's the pattern. There's virtually hardly any exceptions to that rule.
Money leads, GDP is coincident, and the inflation rate is lagging. That, by the way, is the case in the four major foreign economies. Money growth has collapsed. It's brought down economic activity in Japan, China, the EU, and the UK. In the United States, we've had a collapse in monetary growth on the terms in the way in which I measure it. We've had a dramatic deceleration in inflation, what I would call a contra-normal cyclical development. You've had the inflation rate come down without the GDP declining, and that doesn't usually work that way. Now, in economics, quantity effects and price effects both convey knowledge. When economic conditions are weakening, you expect to see the broad volumetric measures to deteriorate.
But when economic activity is weakening, you experience a sharp decline in the inflation rate. Well, the inflation rate has dropped more than it typically does during a recession and immediately after with the GDP still rising. I think that what we're witnessing is a very broad and very basic disconnect between the national accounts and many measures of the economy.
Take for example, one of the things that we've always been able to do for this economy is we've had affordable homes and cars for the vast majority of our people. Yet if you look at the vehicle sales, the new home sales, existing home sales, they're all down very substantially from their peaks of the last five years. Vehicle sales in the teens. Existing and new home sales down in the 35% to 40% range. Very, very broad disconnect.