Good news about the US economy!

Summary: Many people look at the US economy since the crash and deny there has been a recovery. Or a “real” recovery. That’s false. This is the 5th in a series about our recovery; today we examine those parts of the US economy that have recovered — some even making new highs. That’s too bad for the laggards, such as most Americans, but does not make the recovery less real. It does mean that the recovered sectors are unlikely accelerators of future growth.

Contents

Wages – the big “tell”
Vehicles
Business capital expenditures
Consumer Credit outstanding
Housing – our savior?
Other posts in this series
For More Information

(1) Wages

Before we look at the strong sectors, note the big “tell”. The government’s stimulus programs have boosted profits and increased wealth of the 1%. But they have not brought much benefit to most Americans. Inequality has risen, real wage growth stagnate. Here’s the latest in a long stream of evidence, from the Bureau of Labor Statistics. This suggests that a fundamental shift has occurred in the structure of the US economy, as we passed a tipping point beyond which prosperity only trickles down.

(2). Motor Vehicles

Already recovered, and has risen slightly above the Q3 2005 peak to a new high.

(3) Business capital expenditures

It’s recovered, and has risen above the Q3 2007 peak to a new high.

(4) YoY Change in Total Consumer Credit outstanding (excluding Federal loans), NSA

Federal consumer lending is all education loans, the new subprime (despite what you read at Zero Hedge). Consumer credit excluding Federal lending is growing slowly; it has accelerated up to 2.5%/year. Interestingly, it’s now growing at the same rate as retail sales — but retail sales were growing at 5% in 2010, and have slowed to 2.5%. These two series have crossed.

(5) Housing – our savior?

Many people believe that the Fed seeks to recreate the housing bubble, boosting home construction and re-starting home equity extractions. Here are two measures of their little success: single-family home starts and residential construction share of GDP. This is the biggest potential driver of a boom in the US economy. Opinions differ on the likelihood of that happening. The rise in real rates during the past 18 months, and the recent spike in nominal rates, make a boom even less likely.