Relevant and even prescient commentary on news, politics and the economy.

Wealth, debt, consumption…revisited

Here are reminders of Angry Bear posts and contrbutor thinking on “Wealth, debt,and consumption”. Wealth versus income Usually my articles present facts and data and try to drive down to a conclusion. This time, I’m going to drive down to a couple of questions. Income and consumption jazzbumba Part 1…spending as a fraction of net […]

Another Look at Wealth and Consumption – Pt 2

Correlations and Slopes Over Time In Part 1, we looked at the ratio of consumption spending to net worth, and how it changed over time.  This time we’ll look at the correlation between net worth and consumption. Here is the big picture: personal consumption expenditures (FRED Series PCE) plotted against Net Worth (FRED series TNWBSHNO) […]

Income and Consumption

This is another look at the idea I put forth here, that – contra the standard economic idea that consumption depends on wealth – I believe that consumption depends on income.  It’s worth stressing that wealth and income are not independent variables.  Wealth is the accumulation of unspent income plus returns generated on that wealth […]

This Is What You Get When Policy Makers Become Complacent

By Rebecca Wilder  This Is What You Get When Policy Makers Become Complacent The prospects for domestic demand in the US are not bright. The labor market barely generates jobs and fiscal policy is a drag. Americans are consuming; but there’s unlikely sufficient nominal income growth to stabilize consumption expenditure growth at current levels. We’ve […]

Stylized Facts

Net Exports goes negative in 1973 and never recovers. One word: oil. Even the USD depreciation after the Plaza Accord (the one Martin Feldstein likes to pretend was inevitably going to happen then) can’t quite get it back to being positive. And once outsourcing industry to China hits full stride… Private Investment peaks in 2006. […]

A Bleg – Private Consumption Multiplier

from Mike Kimel Hi. For a project I’m working on, I need to find estimates of a private consumption multiplier. That is to say, the multiplier resulting from changes in private consumption rather than, say, from changes in gov’t spending or taxation. Any pointers? Please let me know in comments are by email (mike period […]

Weak consumer confidence and real wage growth portend weak consumer spending

Yesterday the Conference Board released its measure of consumer confidence, which dropped to 44.5 in August. This brings the Conference Board measure of confidence in line with the Reuters/University of Michigan measure of consumer sentiment. Bloomberg summarizes the Conference Board results. Confidence is important, since consumer spending accounts for the lion’s-share of aggregate spending. Consumer […]

US labor market: wage and salary growth vs. payroll growth

I’ll make this quick, since I’m going to get in trouble for writing on a national holiday. But the pace of annual jobs growth is too slow to generate strong wage and salary income. Much empirical research has been dedicated to the estimation of consumption functions, generally finding that labor income is the primary driver […]

Consumption and compensation: explicit and implicit wealth effects in finance

Readers of this blog know that I am in finance, specifically global fixed income. This blog post covers wealth effects in the financial industry, which is a relatively dominant share of total US compensation, 7.3% in 2009 and likely higher now (data are truncated at 2009). My view is that economists underestimate the wealth effects […]