Downward Trend in Initial Jobless Claims Is Flattening Out

Downward Trend in Initial Jobless Claims Is Flattening Out

01/11/2018Ryan McMaken

CNBC reports that "US jobless claims increase for fourth straight week":

The number of Americans filing for unemployment benefits unexpectedly rose last week, hitting their highest level in more than three months, likely as a cold snap kept some workers at home.

The news story uses the seasonally-adjusted numbers, which I'm not crazy about. There's always an easy way to incorporate seasonal issues: simply make year-over-year comparisons. 

If we do this — using the non-seasonally-adjusted data, we find that there is indeed some slow creeping upward in YOY numbers. But note that the YOY changes still mostly remain in negative territory: 

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Last week (January 6), the YOY change in initial claims was still down 2 percent, although the change was flat at zero percent the week before that (December 30). 

As the graph suggests, the downward trend has lessened, and we're seeing more and more YOY changes clustering around zero in recent weeks. 

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A similar trend emerges if we look at monthly totals. December 2017's initial claims were down 5.6 percent compared to December of 2016. That, however, is one of the smaller YOY declines we've seen in recent years. With the monthly data, also, we see a slowing in the downward trend. Initial claims even went up last September, compared to September of 2016, rising 7 percent. But most monthly comparisons continue to show downward movement in total claims. 

This flattening out will probably continue as the current expansion continues, although by itself, this data does not suggest any sort of turning point in the current economic trend. 

For greater context, here's are the monthly numbers over a ten-year period:

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Money-Supply Growth Near a Ten-Year Low As Lending Falls

0 sec agoRyan McMaken

Growth in the supply of US dollars remained near a multi-year low in December, growing 2.9 percent, year over year.

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In November, year-over-year growth in the money supply fell to a 129-month low, growing 2.7 percent. The last time the money supply grew at a smaller rate than November 2017's rate was during March 2007 — at a rate of 2.1 percent. 

The money-supply metric used here — an "Austrian money supply" measure — is the metric developed by Murray Rothbard and Joseph Salerno, and is designed to provide a better measure than M2. The Mises Institute now offers regular updates on this metric and its growth.

The "Austrian" measure of the money supply differs from M2 in that it includes treasury deposits at the Fed (and excludes short time deposits, traveler's checks, and retail money funds). 

M2 growth also slowed in October 2017, falling to 3.0 percent.

Money supply growth can often be a helpful measure of economic activity. During periods of economic boom, money supply tends to grow quickly as banks make more loans. Recessions, on the other hand, tend to be preceded by periods of falling money-supply growth. 

One factor behind slowing money-supply growth is likely a slowing in new loans being made by commercial banks. As we can see in the latest data from the Fed, commercial and industrial loans were up only 0.9 percent in November 2017, compared to November 2016. That's the smallest growth rate recorded since April 2011. The overall trend in loans growth is similar to what we saw in 2009, during the last recession. 

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(Thanks to the intervention of central banks, of course, money supply growth in recent decades has never gone into negative territory.) 

Nevertheless, as we can see in the graph of money supply growth above, significant dips in growth rates show up in years prior to a economic bust or financial crisis. The current trend is an unusual one in which growth in AMS is smaller than it is in M2. In the past this situation has often pointed toward a recession. 

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Personal Saving Rate Falls to 10-Year Low in November

2 hours agoRyan McMaken

In November 2017, the personal saving rate in the United States fell to a ten-year low, dropping to 2.9 percent. The last time the saving rate was lower than 2.9 percent was during November of 2007. 

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The Wall Street Journal reported last month that Americans are spending more and saving less: 

Americans spent more and saved less in November, a sign that low unemployment, robust consumer confidence, the prospect of tax cuts and buoyant financial markets are underpinning a strong holiday shopping season.

Americans are saving at the slowest pace in a decade, likely in anticipation of continued job and wealth gains as stock indexes barreled to new records last month and the unemployment rate stood at a 17-year low.

If we look at saving rates in the wake of the financial crisis, we find saving rates quickly moved upward as consumers were unsure of the future and cut back on spending. Now, with employment growth solid, households are assuming that present conditions will continue, so are saving less and less. 

Last week, we looked at how median net worth in the United States, as of 2014, was still below where it had been in 2001. It remained significantly below where it had been in 2007. 

One of the reasons given (in an NBER report) for the stubbornly low net worth among Americans was the fact that Americans were neglecting to save money. In many cases, they were paying down debt, but we are also witnessing a troubling trend in which Americans are selling assets to pay off debts. But, as the report noted, "the reduction in assets was greater than the reduction of debt."

Debt continues to be a factor: 

The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable primarily to the high leverage of middle class families and the high share of homes in their portfolio. The racial and ethnic disparity in wealth also widened considerably. Households under age 45 saw their relative and absolute wealth declined sharply. Rather remarkably, there was virtually no change in median wealth from 2010 to 2013 despite the rebound in asset prices. The proximate cause was the high dissavings of the middle class, though their debt continued to fall. 

As a final note, we might also consider saving in a larger historical context. Here we see personal saving as a percentage of disposable income. 

In this case, at 3.8 percent in 2017, it has not returned to its pre-Great Recession levels, but of course remains well below where it was during the 1950s and 1960s, when it often reached above ten percent. 

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Government in Action: Crypto Edition

3 hours agoTroy Vincent
  1. Be a central government
  2. Complain of volatility/risk in cryptocurrencies
  3. Talk about banning cryptocurrencies
  4. Cause panic and market fear/uncertainty
  5. Complain of volatility/risk in cryptocurrencies
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Why Did Edmund Burke so Inspire Leonard Read?"

01/12/2018Gary Galles

Leonard Read, founder, leader and long-time heart and soul of the Foundation for Economic Education, and one of liberty’s most insightful adherents, took seriously his belief that the purpose of one’s life was to grow. He sought out sources of light, wherever he could find them, and incorporated them into his thoughts.

Those familiar with Read, whose works are now easily available online, know that he peppered quotations throughout his work. Those quotations provide us an added window into his thoughts. The person Read quoted most frequently in his books was Edmund Burke, which reveals a great deal about Read. In How Do We Know?, Read said “I am often criticized — in a friendly way — for so copiously quoting those whose wisdom is far superior to mine, Edmund Burke, for instance…why not share the wisdom of seers—those who have seen what most of us have not—with freedom aspirants!”

So as we mark Burke’s January 12 birthday, consider some of the words that inspired Leonard Read to cite Burke so copiously:

He who profits of a superior understanding, raises his power to a level with the height of the superior understanding he unites with.

How often has public calamity been arrested on the very brink of ruin, by the seasonable energy of a single man? Have we no such man amongst us? I am as sure as I am of my being, that one vigorous mind without office, without situation, without public function of any kind, I say, one such man, confiding in the aid of God, and full of just reliance in his own fortitude, vigor, enterprise, and perseverance, would first draw to him some few like himself, and then that multitudes, hardly thought to be in existence, would appear and troop about him.

No government ought to exist for the purpose of checking the prosperity of its people or to allow such a principle in its policy.

It is a general error to suppose the loudest complainers for the public to be the most anxious for its welfare.

It is not only our duty to make the right known, but to make it prevalent.

I hope to see the surest of all reforms, perhaps the only sure reform—the ceasing to do ill.

Example is the school of mankind. They will learn at no other.

But his unbiased opinion, his mature judgment, his enlightened conscience, [your representative] ought not to sacrifice to you, to any man, or to any set of men living…They are a trust from Providence, for the abuse of which he is deeply answerable. Your representative owes you, not his industry only, but his judgment; and he betrays, instead of serving you, if he sacrifices it to your opinion.

The only thing necessary for the triumph of evil is for good men to do nothing.

Whenever a separation is made between liberty and justice, neither…is safe.

Power gradually extirpates from the mind every human and gentle virtue.

Whatever each man can separately do, without trespassing on the rights of others, he has a right to do for himself.

All men have equal rights, but not to equal things.

The great difference between the real statesman and the pretender is, that one sees into the future, while the other regards only the present; the one lives by the day and acts on expediency; the other acts on enduring principles and for immortality. 

Depend upon it, the lovers of freedom will be free. 

Men are qualified for civil liberty in exact proportion to their disposition to put moral chains upon their own appetites; in proportion as their love of justice is above their rapacity; in proportion as their soundness and sobriety is above their vanity and presumption; in proportion as they are more disposed to listen to the counsels of the wise and good, in preference to the flattery of knaves. Society cannot exist unless a controlling power upon will and appetite be placed somewhere; and the less of it there is within, the more there must be without. It is ordained in the eternal constitution of things, that men of intemperate minds cannot be free. Their passions forge their fetters.

The greater the power, the more dangerous the abuse.

Tell me what are the prevailing sentiments that occupy the minds of your young men and I will tell you what is to be the character of the next generation.

Having looked to government for bread, on the very first scarcity they will turn and bite the hand that fed them.

The people never give up their liberties but under some delusion.

All who have ever written on government are unanimous that among a people generally corrupt liberty cannot long exist.

If circumspection and caution are a part of wisdom, when we work only upon inanimate matter, surely they become a part of duty too, when the subject of our demolition and construction is not brick and timber, but sentient beings, by the sudden alteration of whose state, condition and habits, multitudes may be rendered miserable…the true law-giver ought to have an heart full of sensibility. He ought to love and respect his kind, and to fear himself.

Leonard Read quoted Edmund Burke in roughly two-thirds of his books. And when you consider those quotes in connection to Read’s work, you can see why Read held Burke in such high esteem and echoed so many of his views.

In The Path of Duty, Read commented on Burke’s views of the American experiment in liberty — “He was sympathetic to and promotive of the American colonies and had no hesitancy in proclaiming his position. Stalwart! He was blest with foresight, seeing into the future: America, home of the free and land of the brave! Here was found the purest practice of freedom in world history, and Burke’s support was based on ‘enduring principles and for immortality.’ In my reading of history, never before or since his time has there been a greater statesman.” In The Freedom Freeway, Read wrote “Edmund Burke has put the solution for disunion better than anyone known to me.” 

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Don't Worry Consumers, Steve Mnuchin Wants to Protect You from Bitcoin

01/12/2018Tho Bishop

It seems like its only a matter of time before the US government introduces a new wave of regulations on cryptocurrency.

Steve Mnuchin was asked about the topic today at an event hosted by the Economic Club, and the Treasuy Secretary was quick to rattle off a number of cliched responses always used to justify bigger and more intrusive government:

"We want to make sure that bad people cannot use these currencies to do bad things," he said Friday at an event hosted by the Economic Club of Washington. He added the U.S. is working with world leaders in the G-20 on "making sure that this doesn't become the Swiss numbered bank accounts."...

Mnuchin also said he is concerned about speculation in cryptocurrencies. The price of bitcoin shot up 1,200 percent last year, and other digital tokens, such as ethereum and Ripple's XRP, have grabbed their share of attention. "I want to be sure consumers trading this understand the risks," he said on Friday. "I'm concerned consumers could get hurt."

Of course, there is some humor in the notion of Treasury Secretary Mnuchin as the protector of consumers against dangerous financial scams. After all, as owner of OneWest Bank bank, it was he that was accused by the California State government for engaging in fraudulent mortgage practices following the financial crisis. As CNN Money noted:

By January 2013, when the memo [written by California investigators] and complaint were prepared, OneWest had foreclosed on 35,000 California homes and had begun foreclosing on 45,000 more, the complaint said. The draft complaint accused OneWest of "widespread violation" of California foreclosure laws.

The memo said that OneWest backdated documents and caused them to be filed with county recorders. It also said that OneWest made unlawful bids at trustee sales, resulting in "the wrong parties winning auctions," and failed to comply with state rules for the timing and mailing of foreclosure documents.

"OneWest's false filings and unauthorized conduct in the course of the foreclosure process harmed homeowners by denying them timely and important information about their foreclosures and potentially shortening the amount of time they had available to find a way to become current on their mortgage obligations," the memo said.

The memo also said that investigators could not subpoena bank records and had been hampered by OneWest's "obstruction" of another state investigation.

Of course, in terms of defrauding consumers, any shenanigans at OneWest bank pail in comparison to Mnuchin's most outlandish con:

 

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Switzerland Bans Welfare Recipients From Obtaining Citizenship

01/11/2018Ryan McMaken

Swiss news site The Local reports that new laws taking effect this month will make it even more difficult for immigrants to obtain citizenship. 

It has apparently been established law for some time that immigrants collecting social benefits are barred from naturalization. The new law, however, now also prohibits naturalization if an applicant has accepted social benefits at any time during the previous three years. 

An exception is made if the benefits "are paid back in full." 

On the other hand, applicants for citizenship now must only have resided in Switzerland for ten years instead of 12, as was the case before the new law took effect. 

It's important to make a distinction here. The change in law is not saying the recipients on social welfare will be deported. It is merely closing them off from citizenship until they can demonstrate they do not require social assistance. 

There is a difference here between residency and naturalization, and the two ought not to be confused. The state is quite flexible with legal residency. The rules for extending citizenship, though, are far more rigorous. 

Indeed, Switzerland has a large number of foreign born residents, and its economy includes many immigrant workers. 

Unlike many other nations, though, the Swiss recognize that the political system is distinct from the economic system, and admitting a migrant to the Swiss economic sphere does not necessarily mean the state must also grant access to the political sphere. 

Moreover, in nearly all cases, immigrants residing in Switzerland have citizenship. They're simply citizens somewhere else. (Swiss law specifically protects immigrant residents from deportation in case of statelessness.)

This is true everywhere, of course. Non-resident immigrants residing in the US, for example, are already citizens. They're simply citizens somewhere else. This fact is confused by the usage of phrases like "illegal alien" or "undocumented worker" which ignore the actual citizenship status of these workers. In most cases, the term "foreign national" — which highlights the fact these people are not stateless — is really more useful than "illegal immigrant." 

After all, the "illegality" of an immigrant is a totally arbitrary status made up by by government bureaucrats, and is no more morally legitimate than the term "illegal drugs." In both cases, the only difference between legal and illegal is some government paperwork. 

On the other hand, there is no clear reason why foreign nationals residing anywhere ought to be given an easy path to citizenship, especially in cases where those residents rely on taxpayer funded services. 

This position, by the way, need not violate the property rights of immigrant residents. After all, property rights exist everywhere, regardless of location, and a respect for property rights suggests that persons ought to be allowed to freely contract with others for employment, housing, and other goods — regardless of an arbitrary government decree of illegality. 

In a 2017 column titled "Don't Confuse Immigration with Naturalization," I explore this topic further.

Preferably, access to the economic system is open to anyone with whom persons are willing to contract, whether they be employers, landlords, shopkeepers, and potential customers for new immigrant-owned businesses. Given that people tend to be quite open to economic ties with others, accessing the economic sphere has long been quite easy for immigrants to the United States. This is precisely because the economic sphere is relatively free and open in the US. 

Granting access to the political sphere, however, opens up a variety of other problems, such as extending access to the ballot box, and encouraging the use of political power to enrich one's self or one's own group. This problem is hardly unique to immigrants, as I've explained here, but as the Swiss understand, restricting access to the political system in this case is often quite prudent. Thus, is makes sense to be open to migration, while being less open with the extension of citizenship privileges. 

The ideal, of course, is to shrink the political sphere in such a way that citizenship ceases to be important. In a laissez faire economy where the state has only a tiny role in the regulation and ownership of property, then it would not be terribly important if one enjoys citizenship or not. The free exercise of one's property rights would be assured regardless. 

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Farewell, Steve Bannon

01/10/2018Ryan McMaken

It's been a bad few months for Steve Bannon. He was fired from his White House job in August. Then he supported Roy Moore and other political dead ends in an attempt to put himself forward as the leader of "Trumpism." Bannon then decided to provide a variety of juicy quotations denouncing Donald Trump in order to help Michael Wolff with his anti-Trump expose. Shortly thereafter, Bannon backtracked and apologized. After that, Bannon lost one of his most prominent sources of funding — the wealthy Mercer family. Finally, to cap it all off, Bannon was fired from his position as an adviser and radio host at Breitbart, where he had long enjoyed positions of leadership. 

This year-long run of total failure comes at the end of a remarkably short period of fame for Bannon, who, prior to Andrew Breitbart's untimely demise in 2012, was neither especially influential or well known. 

In his short period at Breitbart, Bannon did, however, manage to cozy up with Donald Trump and many within his movement, and turn this into an influential position at the White House. Bannon quickly faded as an influential figure in Washington.

In spite of Bannon's short and not-especially-notable tenure as a senior political adviser, Bannon continues to benefit from myths about his status as a kingmaker in Washington and around the nation. But, as Barbara Boland notes this week at The American Conservative, the myth was always just that — a myth. 

Bannon — always a relentless self-promoter — also managed to create the impression that he was the purveyor of some new kind of insightful and revolutionary political plan and vision. The idea was that he was going to create a Republican majority that would persist for generations. 

Upon closer inspection, however, there was never anything especially insightful, creative, or unique about this vision. It has always been nothing more than a re-tread of economic populism in which the Republicans would buy votes with lavish government spending on pensions and other social programs that are allegedly attractive to the "working classes." This would be coupled with economic nationalism opposed to free trade and devoted to aggressive foreign policy. 

David Stockman explains how Bannon's position was just the usual warfare-welfare state vision dressed up in nationalist and culture-warrior rhetoric: 

The last thing America needed was a conservative/populist/statist alternative to the Welfare State/Warfare State/Bailout State status quo. Yet what Bannonism boiled down to was essentially acquiescence to the latter — even as it drove politicization deeper into the sphere of culture, communications and commerce.

Stated differently, the heavy hand of the Imperial City in traditional domestic, foreign and financial matters was already bad enough: Bannonism just gave a thin veneer of ersatz nationalism to what was otherwise the Donald's own dogs' breakfast of protectionism, nativism, xenophobia, jingoism and strong-man bombast.

As Stockman correctly notes, Bannon never exhibited any real understanding of how central banking, Wall Street cronyism, and economic policy were driving the American cultural and economic trends that Bannon so often condemned. 

Instead, Bannon took to blaming people who do understand economics — i.e., Austrian-school economists and various free-market activist types — for various national ills, and for leading the Republican party astray. Says Bannon: 

 And then the Republicans, it’s all this theoretical Cato Institute, Austrian economics, limited government — which just doesn’t have any depth to it. They’re not living in the real world.

Later, Bannon returned to the theme, claiming that free-market ideas don't matter, and that "it is workers, not libertarian theorists, who are the backbone of the country.” (It's unclear if Bannon intends to imply that all libertarians are pie-in-the-sky "theorists" or if he is willing to admit that many libertarians do, in fact, work for a living.) This sort of right-wing Leninism-Maoism functions on the idea that "the working man" is all that matters, and that entrepreneurship, capital, and markets, are all somehow at odds with ordinary people being able to make a living. Not surprisingly, Bannon proposed to prop up the working classes with prohibitions on free trade, on migration, and by protecting federal social programs — thus expanding the debt burden and tax burden on everyone. 

The realities of economics matter little, though, when your political ideology relies primarily on sentimentalism. Bannon bases much of this position on his own nostalgia for the good ol' days in "an observant Catholic family" in a working class neighborhood. 

For Bannon, though, his devotion to this worldview never gets much beyond politics. Indeed, Bannon has an odd way of expressing his supposed devotion to the Catholic social milieu he praises. Divorced three times, Bannon apparently couldn't be bothered to personally do much toward creating the “typical fifties-sixties Americana neighborhood” that he says he wants to re-create. And this well illustrates the problem with turning to politics to cure every social ill. Erecting trade barriers and trashing immigrants isn't going to rehabilitate the American family, or convert people to a devout religious life. That sort of thing requires a lot of difficult non-political action. Were Bannon committed to getting government off the backs of people so they could pursue these goals voluntarily — via decentralization or other practical measures — that would be a good thing. But that has never been Bannon's goal. 

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Vermont Senate Votes to Legalize Recreational Marijuana

01/10/2018Ryan McMaken

The Hill reports today that the Vermont Senate has voted to approve the legalization of recreation marijuana for users over 21 years of age.

With its passage in the Senate, the law proceeds to the governor's desk where he is expected to sign. 

While eight states (AlaskaCaliforniaColoradoMaineMassachusettsNevadaOregon, and Washington) have already legalized recreational marijuana, Vermont will be the first state to legalize via action of the state legislature. All other states that have legalized have done through statewide referenda or voter initiative. 

Since 2012, when Colorado voters approved recreational marijuana, state-level voters have repeatedly shown indifference toward federal drug law — which, of course, is in violation of Article I of the Constitution, and the Tenth Amendment. 

But now, for the first time, a state legislature and governor have joined the movement. This comes, we might note, mere weeks after US Attorney General Jeff Sessions announced he plans to ratchet up the Drug War against marijuana users. 

Apparently, Vermont legislators are happy to disregard him. 

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China Considering Ditching US Treasuries

01/10/2018Tho Bishop

A day after Bill Gross called bonds a bear market, reports are out that the Chinese government is considering slowing our halting US Treasury purchases. While it's easy to connect the dots between this potential change and anti-trade rhetoric from President Trump - which, to date, has thankfully been more bark than bite - the larger issue is central banks are slowly backing away from policies that have inflated bond markets. It's a good time to re-vist an article by Thornton Polleit titled "The Super Bubble Is in Trouble":

First and foremost, the US economy appears to be addicted to cheap money. The latest economic recovery has been orchestrated, in particular, through a hefty dose of easy monetary policy. It is therefore fair to assume that market agents will have a hard time coping with higher interest rates. For instance, corporations, consumers, and mortgage borrowers, in general, will face higher credit costs and a less favorable access to funding if and when interest rates edge higher.

In particular, higher interest rates could send the inflated prices of stocks, bonds, and housing southward. For instance, expected future cash flows would be discounted at a higher interest rate, deflating their present values and thus market prices. The deflation of asset markets would hit borrowers hard: Their asset values would nosedive, while nominal debt would remain unchanged so that equity capital is wiped out — a scenario most investors might assume to be undesirable from the viewpoint of central banks.

Moreover, the yield curve has become flatter and flatter in recent years. This, in turn, suggests that banks' profit opportunities from lending have been shrinking, potentially dampening the inflow of new credit into the economic system. A further decline of the yield spread could bring real trouble: In the past, a flat or even inverted yield curve has been accompanied by a significant economic downturn or even a stock market crash.

That said, investors might expect that central banks find it hard to bring interest rates back up, especially back to a level where real interest rates are positive. This holds true for the Fed as well as for all other central banks, including the ECB. This is because the monetary policy of increasing borrowing rates by a significant margin would most likely prick the “Super-Bubble” which has been inflated and nurtured by central banks’ monetary policies over the last decades.

However, it wouldn’t be surprising if, again, central banks, the monopolist producers of fiat money, turn out to be the major course of trouble. After many years of exceptionally low interest rates, central banks may well underestimate the disruptive consequences an increase in borrowing rates has on growth, employment, and the entire fiat money system. In any case, the artificial boom created by central banks must at some point turn into bust, as the Austrian business cycle theory informs us.

The boom turns into bust either by central banks taking away the punchbowl of low interest rates and generous liquidity generation; or the commercial banks, in view of financially overstretched borrowers, stop extending credit; or ever greater quantities of fiat money need be issued by central banks to keep the boom going, inflating prices so that ultimately people start fleeing out of cash. In such an extreme case, the demand for money collapses, and then a Super-Super-Bubble pops.

As Troy Vincent, a market analyst and Mises Wire contributed, offered an additional note this morning on Facebook:

The fact that Bitcoin didn't get bid up in response to this news, while treasury yields and physical gold did, is pretty interesting.

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The Net Worth of Americans Still Hasn't Recovered from the Last Recession

01/09/2018Ryan McMaken

Axios is reporting today on commentary from Deutsche Bank economist Torsten Slok in which Slok concludes that Americans now have a smaller net worth than they did in 1989: 

A greater share of Americans have more debt than money in the bank than at any point since 1962, according to Deutsche Bank economist Torsten Slok. And, in a note to clients yesterday, Slok said that, despite record stock market wealth and home price levels just shy of housing-bubble highs, Americans are poorer than at any point in nearly a quarter century.

Why it matters: The data suggest that the third-longest economic expansion in history, and the lowest jobless rate in 17 years, has benefitted an exceedingly thin slice of the American public.

Here's the graph that goes with the story: 

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Unfortunately, no link is given to the client note. 

If you're like me, though, you always like a context for research like this, and aren't content with a quick blurb. 

So, to add some background to this, I managed to find a working paper from the NBER, titled "Household Wealth Trends in the United States, 1962-2013: What Happened Over the Great Recession?" which goes into a little more detail on these calculations. 

The Deutsche Bank data appears to be continuing Wolff's research from this older NBER report, which stopped with 2013 data. 

In it, we do indeed see that median household net worth as of 2013 was lower than at any other time shown since 1962: 

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As the report notes, household wealth plummeted during the Great Recession, and as of 2013, at least, had not recovered. Slok's update suggest that net worth has increased since then. It looks like median household net worth increased from about $63,000 to about $78,000 between 2013 and 2016. That's good, but it's still well below where it was in both 2001 and 2007. 

But why do households appear to be largely spinning their wheels on household net worth?

For decades, net worth in the United States has been closely connected to housing prices. The homeownership rate reached 69 percent in 2004, and those homeowners saw their net worths expand as home prices expanded in the same period. 

In recent years, home prices have gone up considerably. So why has net worth not done the same? 

According the the NBERreport:

Asset prices [including home prices] plunged between 2007 and 2010 but then rebounded from 2010 to 2013. The most telling finding is that median wealth plummeted by 44 percent over years 2007 to 2010, almost double the drop in housing prices... Relative indebtedness expanded, particularly for the middle class, though the proximate causes were declining net worth and income rather than an increase in absolute indebtedness. The sharp fall in median net worth and the rise in overall wealth inequality over these years are traceable primarily to the high leverage of middle class families and the high share of homes in their portfolio. The racial and ethnic disparity in wealth also widened considerably. Households under age 45 saw their relative and absolute wealth declined sharply. Rather remarkably, there was virtually no change in median wealth from 2010 to 2013 despite the rebound in asset prices. The proximate cause was the high dissavings of the middle class, though their debt continued to fall. 

So, the situation did indeed stabilize as home prices rebounded, but Americans were also neglecting to save any money in other forms. In part, they stopped saving in order to pay off debts, which were substantial:

The stagnation of median wealth from 2010 to 2013 can be traced to the depletion of assets. In particular, the middle class was using up its assets to pay down its debt, which decreased by 8.2 percent over these years. This shows up, in particular, in reduced asset ownership rates. The homeownership rate fell from 68.0 to 66.7 percent, that of pension accounts from 45.8 to 44.4 percent, that of unincorporated businesses from 8.2 to 6.6 percent, and that of stocks and financial securities from 15.3 to 14.2 percent. However, the reduction in assets was greater than the reduction of debt. 

So, we end up with a picture in which Americans did see their asset values increase, which did help net worth. But at the same time, owner asset rates among many Americans actually declined, and at a faster rate than debt declined. 

This is a fairly grim picture, and does paint a good picture for the standard of living Americans will enjoy once their prime earning years pass us by. 

All too often, economic indicators rely on current earnings, and current spending. Net worth, however, gives us a glimpse into the future. If net worth is declining or stagnant, than future retirees will eventually spend down their savings more quickly, and then have to cut back their standard of living to pay for basic necessities. 

Moreover, if the current trend continues, Americans will begin the next recession from a far lower level of net worth than they started the 2007-2009 recession with. That is, we'll begin the next recession with our net worth not even having recovered from the last one. That's not a great place to start. 

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