truthseeker

Mish in this past weekend’s WSJ the lead editorial “The Return of 3% Growth “ reported that tax reform and deregulation have lifted the economy out of the Obama doldrums. Then they go on to say that the most intriguing thing about all this is that the government’s annual revisions to long term GDP on Friday showed a sharp increase n the personal savings rate. The increase was due to an upward revision in wages and salaries and jumped to 6.7% from 3.4% for 2017 and averaged 7% in the first half of this year. That’s about 500 billion more n the pockets of Americans than previously estimated and helps to explain why the consumer has remained strong. With tight labor markets, consumer spending should keep contributing to growth.Well I was really surprised by all this. I thought the average consumer was on the ropes and having to spend savings and take on increasing debt just to try to keep up. I’m pretty sure u have already read this article, so I’d just like to know what u think about it.

Comments (3)
No. 1-3
everything1
everything1

I saw an article on this too. It seems small business really ramped up, and I see it too, going for a walk through business parks, I see small companies that are mostly catering to the upper middle classes and richer society, some are scrapers, recyclers, still others do things like believe it or not shredding, inking, I see allot more contract and sub contracting work than I've ever seen before. I think it depends, but people know that a savings account is theirs, the debt they owe is theirs but we don't really have debtors prison, although collectors have some interesting methods for shaking people down, and the big boys will sell your debt. SO, they don't have to pay it back, they are saving for a rainy day. Also, for instance, I have a 2.625% mortgage rate, that's more or less shorting the dollar, no need to pay that down. But, you have to ask yourself, who's really saving, it's probably the people with higher incomes. I stopped at a leather store the other day to get a belt fixed for my grandpa, they said, starts at $50, instead I went to a garage sale and bought him 5 belts for 5 dollars, and tailored them myself, many of these stores, outlets, retailers, dealers, services, it blows my mind what they charge. I agree though, when times are good savings should be increasing, and I think they are some. My CU has been pushing it for years now, why I don't know because they still pay a tenth of a point on saving account. But allot are making more money these days, I have $8,000 coming out of my yearly salary for health insurance, that's a really, really good racket for someone, Amazon could only wish, oh but wait didn't they just step into the pharmaceutical business? I have a neighbor making 3 figures working for an insurance company that insures insurance companies, I had no idea.

truthseeker
truthseeker

Hey Mish I was trying to remember, I think the article said that corporate earnings were going to b much higher than expectations because of the tax cuts and a dramatic reduction in all kinds of regulations. Also I wonder how much the insane amount of debt induced corporate buybacks~2 trillion? increased earnings to help get the stock up even higher to help the boys with their stock options. Why make capital investments for research and development and upgrade plant and equipment, software maybe even hiring a few people to grow the business to gain market share for the company’s future? Also I was really surprised by the new savings figure they came up with to add potentially 500 billion more spending power to the economy.Also did u read in today’s WSJ the article by James Mackintosh about the dramatic increase in the size of the auctions, the extra supply needed to finance record budget deficits and increasing QT making most experts plan for much higher rates moving forward? “Term premium” is something I haven’t seen before nor do I really understand it. “Yields sink ahead of treasury auctions” is another article n today’s WSJ talking about all this and with less liquidity does the Fed worry at all about mortgage rates or dangers to derivatives or problems with emerging markets with large dollar exposure along with trade problems?


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