Interestingly, the study went on to note that various transfer payments (aka tax deductions and social welfare payments) largely evened everything out, though you wouldn’t know it from the personal spending and consumption data. This is one of the reasons why I like to talk about the labor force participation rate and the employment to population ratio’s. Since the depths of the recession in early 2010, the population has increased by 15.4 million, and on net aged. Moving to jobs and 14.3 million were added over the same period. The current estimate is that some 205,300 new jobs need to be created each month to keep up with the population growth. Helps to put the jobs numbers into perspective, just like the tax receipts data. Both items go a long way to explaining weak end user demand, aka personal consumption. Both point to weak income growth, I don’t care what the official unemployment rate is.
Another circus shell game popular since the 2008-2009 financial crisis has been the corporate share buybacks and mergers to prop up earnings, much of it funded through debt issuance. As per Gallup, this maintains the illusion of growth despite its organic absence, because income is weak so spending and consumption is also weak. Some highlights from the Gallup study: the number of publicly traded companies has fallen from 7,300 to just 3,700 in the last 20-years. With the 2nd quarter earnings reporting season upon us, it’s well on track to produce a 5th consecutive quarter of earnings declines, and a 6th consecutive quarter of revenue, aka sales declines. For the record, trends like this produce severe market declines as well, if history is any guide.
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