HSBC group chief economist Stephen King points to the stock market’s multi-year advance and the under performance of the (U.S.) economy as a growing gap between hope and economic reality by BOTH policymakers and households in his new book When the Money Runs Out: The End of Western Affluence.
King says "We’ve been wrongly budgeting for a return to 3.5% per year average real growth."
Ok lets look at some 50 year charts all with a start date of 1962 to see what the trend is. Down.
The shaded areas on the chart all touch Zero to 5% per year GDP growth at March 31/13 on the right hand % Y axis. All 4 developed economies have the same degree of slope down on lower highs and lower lows.
Australia gets the closest to policy desires but has dropped to 2.5%. Both the United States and Canada are under 2% and Great Britain is under 1%, way under.
If the housing inflationists want to keep chasing real estate prices higher, I suggest they start buying a lot of goods and services otherwise the GDP charts are going to continue eating away at employment, wages and income distribution.
Read the whole July 8/13 interview of Stephen King, by Michael J. Casey, The Wall Street Journal.