Registered Investment Adviser Caleb Lawrence
The major averages enter the final hour with significant gains on generally positive data. For the holiday shortened week the Standard and Poors 500 Index has gained 25 points or 1% while the NASDAQ has given up 44 points or .6%.
Personal income increased .4% in February an 8th consecutive advance on strength in small business and rental income. Wages and salaries marked a 4th solid gain. On a year ago basis personal income is up a respectable 3.7% nominal, and 1.9% real or inflation adjusted. Personal spending was unchanged in February. The Personal Consumption Expenditures Deflator or PCE which measures price changes increased .2% in February, and 1.8% from a year ago. Most of the price gains are coming from the energy sector and to a lesser extent healthcare and housing.
Gross Domestic Product or GDP has grown steadily since the last crisis, though somewhat slowly based on modern history. One component of economic growth is of course government spending. In the post crisis period the government has borrowed huge sums to finance said spending, pay for our endless wars, and right the economic ship. At the end of 2007 Treasury Debt Outstanding or TDO was 9.2 trillion Dollars, by the end of 2017 TDO had jumped to 20.5 trillion and increase of 11.3 trillion or 123%. Nominal GDP on the other hand went from 14.7 trillion in 2007 to 19.7 trillion in 2017 an increase of 5 trillion or 34%. Given that more than doubling the official debt level over the last 10-years isn’t sustainable and that the rate of debt growth is more than double economic growth it doesn’t take a PhD in either economics or mathematics to realize that absent some new game changing economic paradigm that we face structural economic crisis.