Long term convergence intersecting at the GFC and now oppositely diverging since the start of baby-boomer retirements in 2011.
First time in post WW2 history where domestic income is significantly exceeding real GDP and the trend is towards even further divergence (not a prediction this is going to happen).
Major dis-saving, increased govt xfer payments for SS and Meds, and ROW lowering the price of imported product in USD terms.
2 comments:
Matt, why are you comparing real and nominal quantities? Since the real GDP figure is based on using chained 2009 dollars as an index, then of course 2009 is going to be the place where the two curves intersect.
Dan see here:
http://www.bea.gov/papers/pdf/measuring_the_effects_of_terms_of_trade_reinsdorf.pdf
Looking at longer term comparison of the trade terms effecting the GDI vs. real GDP...
Might show (in relative terms albeit within the NIA framework...) the effect of the recent price reductions in USD terms by foreign controlled sources of product (oil at $40, gas at 2, steel in toilet, etc...)
This is good from the paper link: "Export and import prices have therefore taken on an increased importance in determining nations’ real consumption possibilities, making information on the effects of changes in these prices an integral part of the story of macroeconomic developments"
So as a big importer, US having foreign sources of product lower their USD terms should have a positive effect here for US citizens consumption / consumption potential...
So you see a wide divergence back in the 70s when the OPEC people were really screwing us, now that has reversed and is going the other way as oil has collapsed... is at least a correlation...
I assume economists think "the exchange rate improved so now imports are cheaper" while I assume "imports are cheaper so the exchange rate improved..." This may be a way to gauge said improvement in relative GDP terms... iow right now with the cheap imports in USD terms, it may be like we had a 12.5% improvement in GDP...
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