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More on underconsumption and the end of excess demand

More on underconsumption and the end of excess demand

Underconsumption is the term we’re now using to describe the thesis that we are living in a world of excess supply. The novelty here – as I pointed out yesterday – is not that the world is oversupplied – and therefore lacking in developed economy private capital investment, but rather that the oversupply situation is longstanding.

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Proof that the global economy is re-accelerating

Proof that the global economy is re-accelerating

In February, the rate of growth of Italy’s manufacturing sector showed the fastest increase in output and new orders since December 2015. Employment growth was the highest since late 2000.

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Three charts which show the Fed is tightening aggressively

Three charts which show the Fed is tightening aggressively

I have three charts for you which demonstrate that the US Federal Reserve is tightening monetary policy.

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The divergence in equity and credit markets

The divergence in equity and credit markets

This chart speaks volumes about the Trump rally.

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This is the biggest takeaway from the US GDP report

The GDP report today showed middling growth of an annualized 1.9% in the US in the last quarter of 2016. That’s not gangbusters, but it’s not bad either. The thing to look at is consumption, because that shows the consumer chugging along. While this revision showed the overall level of GDP growth unchanged, the consumption number was revised way up to 3.0%.

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How long will US consumer demand keep up?

US GDP numbers released today show the economy grew at a 1.9% annualized pace in the last quarter. That follows a 3.5% pace in the quarter before. Not bad. But the question now is how long this will keep up. Declining auto sales might offer a clue.

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Underconsumption and the end of excess demand

Yesterday’s post on the failure of Japan’s monetary policy experiment drew some favourable commentary from a prominent macroeconomist that I want to run by you. The gist of his insight is that we have long been living in an age of an excess supply which is only now being made plain. Let me run the tenor of his comments by you and make some additional ones of my own.

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What will Trump say about Chinese manipulation at the SOTU address?

What will Trump say about Chinese manipulation at the SOTU address?

Tonight US President Donald Trump is due to give his first state of the union address. From a foreign policy perspective, the big item on the table is Russia. But from an economic perspective, the country we meed to be thinking about is China. Here’s why.

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The re-nationalization of eurozone lending

While most analysts have been focused on credit growth which has re-emerged after the sovereign debt crisis, cross border inter-bank lending has decreased, fragmenting the euro zone along national lines. In a crisis scenario, one should expect that fragmentation to increase dramatically, putting extra stress on national central banks and increasing financial fragility in the eurozone’s periphery.

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A few comments on the end of secular stagnation

The failure of Japan’s grand monetary policy experiment to meet expectations is a warning sign we all should heed. But right now fears of so-called secular stagnation have receded as the global economy has roared back to life. We should not dismiss the threat of secular stagnation so easily. Here’s why.

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Why Japan’s monetary experiment has failed and what it means for everyone else

Yesterday’s most interesting headline in the Wall Street Journal was “The World’s Most Radical Experiment in Monetary Policy Isn’t Working”. After reading it, the right questions to ask are “why isn’t the policy working?” and “what does this mean for the global economy?”. Here are my answers.

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Germany leading by example

Germany leading by example

Here’s an example of Germany’s leading by example on fiscal policy.

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