A close family member got fired today. This reminds me of a conversation I had with this person recently who asked me for my 5 year outlook. And I said, “Oh god, we are in a depression within 5. Full fledged.”
And they said, “No fucking way.”
And I said, “Economists agree with me“
They asked to explain. I said, its all in the data. Lets look at it in 4 exhibits:
Exhibit 1: Housing
Inflation adjusted housing continues to skyrocket. If you notice the inflation amount through the 70s 80s and into the 2000s stayed within a certain corridor of January 2000 (100 = nominal price as of January 2000, everything has been adjusted to that). We have SKYROCKETED. The housing collapse wasn’t enough. We are pulling back up to almost double where nominal is.
Exhibit 2: House hold debt
Again, another lesson not learned. Instead of staying nominal from the 60s and 70s, around the 80s we decided to up the amount of debt which has jumped dramatically in the same timeframe as housing did (interesting). The source of this debt is of course primarily fueled by household debt, but student loan growth continues to grow exponentially.
Im going to run out of adjectives.
And can people pay this debt? Well….
Exhibit 3: Income
So the top Quintile has grown like gangbusters. But most of us aren’t in that top quintile. Most of us are left with trash growth since the 80s. Lets see how laborforce salary is doing
Exhibit 4: Labor Income
Ruh roh
You guys see whats going on yet? Income is stagnant. Debt continues to grow. Housing is still inflated.
My theory….
The bailout delayed the inevitable. You cant have people live on debt and not be able to afford anything. How high does housing have to go up? How much does consumer debt have to increase? How much do worker wages have to go down? How much does middle class wages have to stagnate?
All of these questions are rhetorical.
I am not sure any government can stem the tide for much longer. Shit is going to get rough man.
Some economists would describe a depression as a severe market correction. And I think we are due one. Its coming along the horizon. I don’t think Trump or any fool could stop it. And hell, all Trump is going to do with his tariff bullshit is expedite it.
Maybe not today, tomorrow, or 5 years from now. But soon. Full depression.
Pay off your shit. Get out of debt. The market is going to tank.