GDP Trends
Here’s the latest, including the second (February 2023) estimate of GDP in the final quarter of 2022:
The exponential trend line indicates a constant-dollar (real) growth rate for the entire period of 0.77 percent quarterly, or 3.1 percent annually. The actual beginning-to-end annual growth rate is also 3.1 percent.
The red bands parallel to the trend line delineate the 95-percent (1.96 sigma) confidence interval around the trend. GDP has been below the confidence interval since the government-induced pandemic recession of 2020. Come to think of it, the back-to-back recessions of 1980-1982 and the Great Recession of 2008-2010 were also government-caused — the government in those cases being the Federal Reserve. The short recession of 2022, which may soon be followed by another one, can also be chalked up to the Fed.
Here’s another depiction of the general decline in real economic growth:
And here’s another view:
The trend lines, which reflect the rate of growth during each business cycle, are getting progressively “flatter”, that is, the rate of growth (with a few exceptions) is dropping from cycle to cycle.
However you look at it, the steady decline in real GDP growth is the handiwork of government spending and regulatory policies. For much more about that plague, which has existed for more than a century, see this and this.
Unemployment
The government-reported unemployment rate of 3.3 percent for January 2023 is actually 10.5 percent. What the government doesn’t publicize is the labor-force participation rate, which has dropped from its January 2000 peak of 67.3 percent to 62.2 percent. See this post for details of the calculation. Here’s an up-to-date graph of nominal vs. actual unemployment rates:
Consumer Price Index
The index of prices for urban consumers (CPI-U) is the one that gets the headlines. There has been much ado in recent days about the drop in the rate of inflation, which only means that prices (as measured by the Bureau of Labor Statistics) aren’t rising quite as rapidly as they had been.
Here’s how things looked as of January 2023:
I don’t take any solace in the fact that the most recent year-over-year rate — 6.45 percent — means that prices double every 11 years. Back in the good old days when inflation was running in the neighborhood of 2 percent, prices would be expected to double every 36 years. An average Joe — not the idiot in the White House — could live with that. Now, he’s scrambling to pay his bills, probably with credit debt that is becoming more expensive to carry.
Ominously, perhaps, is the 4-quarter average of annualized monthly changes in the CPI. The 4-quarter average had been dropping steadily since hitting its recent high of 14.0 percent in June 2022. But in January 2022 it jumped from the previous month’s value of -0.7 percent to 2.5 percent. Not a good sign, especially give the jump in the producer price index (PPI), which may foreshadow a rise in the year-over-year value of the CPI.
The Stock Market
A bear market is usually defined as decline of at least 20 percent in a broad stock-market index. The S&P 500 index topped out at 4818.22 in January 2022, dropped to 3636.87 in June, rose to 4325.28 in August, dropped to 3491.58 in October — the low (to date) for the current bear market, 27 percent below the January peak.
Since then, the index has risen, dropped, and risen again. Friday’s closing price of 3970.04 left the index 18 percent below its peak. Technically (and arbitrarily), the market is no longer in bear country, but that doesn’t mean that the bear market is over.
Here’s the story to date:
The dashed red line is 20 percent below the January 2022 high. The meandering route of the weekly average (which I use for analysis of long-term trends) has taken the index above the “magic” 20-percent line more than once.
But the end of a bear market isn’t confirmed until two things happen. The first is that the 26-week average turns up and continues to rise for at least 13 weeks. That hasn’t happened, yet. And it may not happen for a while. The low (to date) occurred after the impressive rally of June-October 2022.
The second indicator is the value of a volatility index that I have concocted. It hasn’t dropped into bull-market territory yet. But it can drop suddenly — and unpredictably.
As the man said the market is a random walk down Wall Street. Anything can happen, and it usually does: war, riot, natural disaster, political turmoil, unexpectedly bad or good economic news, etc., etc., etc.
Stay tuned.
Presidential Popularity: Obama, Trump, Biden
I have followed the Presidential Tracking Poll at Rasmussen Reports* since Obama was elected in 2008. The straightforward Approval Index (strongly approve minus strongly disapprove) doesn’t quite capture the way that likely voters assess a president’s performance. So I concocted an “enthusiasm ratio” — the number of likely voters who strongly approve as a percentage of the number of likely voters who venture an opinion one way or the other (thus omitting the voters who are non-committal). Here’s a comparison of the enthusiasm ratios for Obama (first term), Trump, and Biden (through 02/24/23):
You might ask how Biden caught up with Obama. I have no answer other than the fact that most voters have short memories and seem to care little about the consequences of leftist governance. It will take a major change to move the needle downward; for example, irrefutable proof that some of the classified documents found in various places owned or controlled by Joe were used by Hunter in the family’s influence-peddling business. On the other hand, a peaceful resolution of the Russia-Ukraine War would (for no real reason) redound to Biden’s benefit in the polls.
Right Direction or Wrong Track
Rasmussen Reports also publishes a weekly poll in which 1,500 likely voters are asked whether the country is going in the right direction or is on the wrong track. The results, as you would expect, are volatile — reflecting the recent headlines and media spin. Government shutdowns, for example, which are actually good news, are widely viewed as bad news. Here are the weekly results (through last week) since Obama took office in January 2009:
The mood of the voters polled during Trump’s term in office never reached the depths that it reached under Obama. Biden is following in Obama’s footsteps, and he has two more years in which to reach a new low — unless he is impeached and removed from office for his influence-peddling business.
* I follow Rasmussen Reports because of its good track record — here and here, for example. Though the Rasmussen polls are generally accurate, they are out of step with the majority of polls, which are biased toward Democrats. This has caused Rasmussen Reports to be labeled “Republican-leaning”, as if the other polls aren’t “Democrat-leaning”.