this is quite long, but IMHO a very telling analysis ...





this is quite long, but IMHO a very telling analysis ...
A few points:
1) Consumer assets are still 5.5 TIMES consumer liabilities. The ratio of changes in liabilities to changes in GDP is a reflection of a housing boom.
The author chose to use the first 11 quarters of a recovery and that mischaracterizes the situation since the recession was the mildest of the ones shown. This ratio rises in "good times". If he had shown the last half of the 1980 or 1990s he would had had a large increase. Also it is very dangerous to compare stocks and flows--changes in stocks and changes in flow is even more invalid)
2) Why did the author in the chart of Nordstrom/WMT stock leave off 1999? Because the ration in 1999 was over 3.0 (making the current 0.8 look lame) JWN stock is a late bloomer whereas WMT is an early bloomer and the company does well in al times. That is what WMT has a price earnings multiple of 23.06 where JWN has a PE of 18.58. JWN doing well means a good economy.
PS Between 1999 and 2001 JWN dropped 70% (40-15 and it is up to just under 47) WMT went from 40-52





I agree that choosing other time periods certainly skewes the point that the author was trying to make ... i.e. that as the US economy goes forward US consumers who would normally have the means to shop at Nordstroms will become financially better off, while US consumers whose means only allows them to shop at WalMart will become financially worse off. However I do agree with this central point, that the rich will be getting richer, that the poor will be getting poorer, and that the middle class will be reduced by a few middle class people entering the realm of the rich but many other middle class people being reduced to the realm of the poor.
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