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Econintersect has been playing with an economic index based on the world as
seen by Joe Sixpack. For lack of a final name, we have used a development tag of “Joe’s Index” which is based on Joe’s real income and the change in his home value, which, to various degrees, Joe sees as income (and/or wealth) gain or loss. Joe’s Index is indicating Joe Sixpack is coming back to the consumption trough. [Let us explain why we have come to that conclusion.] Words: 380
So say John Lounsbury and Steven Hansen (www.econintersect.com) in edited excerpts from their co-authored original article*.
Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has edited the article below for length and clarity – see Editor’s Note at the bottom of the page. This paragraph must be included in any article re-posting to avoid copyright infringement.
They go on to present, in part, the following:
The New York Times this week posted Consumers Unlikely to Rekindle the Recovery and to “prove” their point they presented three nasty but, unfortunately, correct graphics.
This NYT post presented reasons for optimism as well, and we believe fairly presented the current situation. Forward looks at the economy are educated guesses – there are no proven formulas.
If you look closely at the first graphic (for disposable income), you will notice a slight uptick at the end. The downward trend in disposable income has been broken for at least one month – both on a real and per capita basis.
Econintersect has been playing with an economic index based on the world as seen by Joe Sixpack. For lack of a final name, we have used a development tag of “Joe’s Index”. Joe’s Index is indicating Joe Sixpack is coming back to the consumption trough.
We believe the Joe’s Index leads GDP in both trend and exaggerated intensity. More time will test this belief. Joe’s Index is based on Joe’s real income and the change in his home value, which, to various degrees, Joe sees as income (and/or wealth) gain or loss.
Take Note:
At this point the index is only telling us that Joe Sixpack should have expanded consumption in 2Q2012. Joe’s Index needs to be refined further to estimate home prices in real time. As things stand now, Joe’s Index has a data lag of one quarter. This improvement will allow vision into 3Q2012.
Conclusion
For now, the economic trends are not all negative – and the future USA economy is not written in stone irrespective of pundits’ opinions.
*http://econintersect.com/wordpress/?p=23779#more-23779 (To access the above article please copy the URL and paste it into your browser.)
Editor’s Note: The above article may have been edited ([ ]), abridged (…), and reformatted (including the title, some sub-titles and bold/italics emphases) for the sake of clarity and brevity to ensure a fast and easy read. The article’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.
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Attention Econintersect
I’d like you to consider doing another et of charts showing the spending habits of all those that were part of the middle class but are now chronically unemployed…
As this group grows in size, their true effect on the US economy increases, yet the “system” avoids even including their data into its projections of growth.
I believe that a “global” US data diagram would illustrate a much more severe financial situation in the USA as the Countries wealth become concentrated in an ever smaller group of Ultra Wealthy families.