chart of the week - Trim Tabs Consumer Spendables Index
The objective here is to try and compare the amount of money available for consumer spending today versus similar amounts available in the past. With many thanks to Trim Tabs for preparing this graphic summary ...
http://2.bp.blogspot.com/-e416epCld7...Spendables.png
On the face of it, this chart looks fairly discouraging. However, if one looks 'under the hood' it becomes even more discouraging. First issue is that a 2002 US dollar had 50% higher 'purchasing power' than a 2011 dollar. Thus to break even with 2002 consumer purchasing power with 2011 dollars, the 5.2 billion total of 2002 would need to be 7.8 billion ( but in reality it's only 6.2 billion = a 21% reduction versus 2002 'purchasing power' ). Second issue is that the US population has increased from 288 million to 313 million, such that on a per person basis the total number of available consumer spending dollars must be divvied up among 8% more persons. Cumulative effect is that per person available consumer spending dollars are currently 29% BELOW 2002 levels in terms of 'purchasing power'.
Trim tabs then moves on to something they call the 'dependency ratio' ...
http://3.bp.blogspot.com/-vy3rV0eL2b...Dependency.png
(snip)We have been alarmed at the rapid growth in government social programs. Several months ago, we introduced the TrimTabs Dependency Ratio, which compares income from government social benefits to income from wages and salaries. The ratio increased from 9% in 1960 to 36% in March.
We are introducing the TrimTabs Dependency Ratio II, which adds income from government wages and salaries to income from government social benefits and compares it to income from wages and salaries. This modified ratio rose to 66% in March, from 33% in 1960 and 45% in 2000.
The principal driver of the increase in TrimTabs Dependency Ratio is the rapid rise in government wages and salaries and social benefits over the past decade. From 2000 to 2010 private sector wages and salaries grew 29%, whereas government wages and salaries plus social benefits grew 89%, nearly three times the growth rate of private sector wages and salaries.
The government is playing an increasingly dominant role in the economy by borrowing massive sums to fund social welfare programs. This borrowing is financially unsound if not morally wrong. Instead of creating new wealth, it is simply piling more debt on an economy with the same capacity. At some point, the carrying capacity of the economy will be exhausted. We believe the economy is at or near that point.(snip)
from