I'm concerned that the tax cut for the other 99% is so small that it will be spent, not saved, but it won't be enough for substantial durable goods purchases. So, that could be an inflationary trigger. Not necessarily so, but a concern.
Wage growth stagnation isn't new and hasn't been for 15 years or more. In fact, given inflation, there is wage contraction in most industries. While that keeps prices down and inflation low, it still begins to affect consumption overall and that is a drag on nGDP. But, it's been going on for a long time and the GDP keeps inching up, so i'm not sure we have the data to support the theoretical in this case. (Just like the super low unemployment numbers in the late 90's failed to trigger inflation the way the UofC types expected.)
Inflation as reported doesn't include daily energy. So, the gas prices being up have a drag on other spending. This is actually a brake on inflation because there are fewer dollars chasing after the same goods. Once again consumption goes down which slows nGDP.
I think most economists who don't buy supply side believe the biggest concern in soft housing is unemployment. No new housing, no jobs. The plummeting of income by those workers has a huge effect on C, once again, braking GDP.
Since gasoline and diesel are part of GDP, the higher prices there offset the lower consumption in other areas. So, the GDP doesn't suffer growth restraint immediately. Takes a while before it actually affects the numbers to a statistically significant degree. That said, part of this big quarterly growth is the fuel prices, which changed before people could alter already committed spending. So, debt goes up or savings go down, which is unsustainable for more than a few months.
My guess is that the GDP will flatten out to the fit of the 10 year trendline (2.2%) with a reasonably made adjustment to partially discount the rotten growth of the Silverspoon recession. So, my guess is 2.5 to 2.7% real.
= new reply since forum marked as read
