When looking at a historic depiction of U.S. GDP over 20 years, it is fairly hard to avoid noticing the business cycle. The lighter line showing the year over year change in the annual rate of GDP reveals fairly regular periodic oscillations:
Real GDP growth, % change, annual rate
Source: Lombard Street Research
Note the red circles above indicate economic recessions.
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Quote of the Day: ”
The art of leadership is saying no, not saying yes. It is very easy to say yes.”
-Tony Blair, British PM
Interesting observations from the WSJ this weekend:
“The market has a problem with the possibility of a Democrat winning, but doesn’t seem to have a problem with the reality of a Democratic president,” says Tom Gallagher, an analyst at economic-research firm International Strategy & Investment in Washington, D.C. Mr. Gallagher also notes that the market tends to do better under Democratic presidents than under Republicans.”
The article (see link below) is chock full of other counter-intuitive observations. Consider, for rexample . . .
Fascinating story in today’s Times regarding the drop in Americans’ incomes. The surprising culprit? “Falling incomes, rather than tax cuts, appear to count for the greatest share of the decline in income taxes paid.”
graphic courtesy of New York Times
This two year consecutive drop, like the tech bubble that preceded it, is unprecedented in post war America:
“The overall income Americans reported to the government shrank for two consecutive years after the Internet stock market bubble burst in 2000, the first time that has effectively happened since the modern tax system was introduced during World War II, newly disclosed information from the Internal Revenue Service shows.
The total adjusted gross income on tax returns fell 5.1 percent, to just over $6 trillion in 2002, the most recent year for which data is available, from $6.35 trillion in 2000. Because of population growth, average incomes declined even more, by 5.7 percent.
Adjusted for inflation, the income of all Americans fell 9.2 percent from 2000 to 2002, according to the new I.R.S. data.”
That is some nasty data. While we all have anecdotal tales as to how the public gets impacted by economic recessions, its certainly stark when you see it in black and white.