The big picture is the risk that growth may well have peaked in the current cycle:
And personal consumption expenditure flows (population adjusted) have arced in a worrying sign of secular decline for some time:
GDP growth less private employment growth has been negative since Q4 2010, one of the very few such periods in the post war period and the weakest to date and symptomatic of weak productivity and wage growth:
Preliminary US GDP grew by a real $22bn in the first quarter. Given that we are unlikely to see the weather related bounce back in growth that we saw last year, we are left wondering where growth is going to come from in the second and third quarters, especially if global trade fundamentals remain weak.
The growth trend is still fundamentally weak, over reliant on consumer credit and exposed to a potential inventory correction.
Post the debt fuelled 90s and 00s, growth has tailed off as shown by the annualised real growth rate over rolling 5 year time periods. As noted in prior posts, growth between the 90s and onset of the “crisis” was very likely overly leveraged:
Growth is still historically weak and if we take away increases in consumer credit and adjust for inventories, the trend remains so:
There are some interesting patterns and trends in US data: so I do ask myself, are we at the peak of the current cycle, are we as far as debt and low interest rates can take us?
US income growth has long been acknowledged to have weakened considerably yet recent data shows that the trend has indeed been weaker than first thought. Note the following chart showing pre and post revisions to chained per capita personal disposable income:
Increases in private payroll employment are weak in historical terms. But if only that were the only issue: weak population growth, falling participation rates, elevated part time employment and continued weakness in self employed categories raise serious concerns for growth dynamics.