IN THE KNOW, AHEAD OF MARKETS, DECIDING WISELY

Tuesday, May 3, 2016

People Sense #Economic Recovery is BOGUS


One Chart Says It All

People sense the 'recovery" is bogus, and their rational response is to save more money rather than squander it.

Sometimes one chart captures the fundamental reality of the economy: for example, this chart of money velocity and the civilian-population ratio. 

When the blue line is up, more of the population has a job. (the blue line is the Employment-Population ratio.)f
The red line is money velocity, the rate at which money changes hands. (Money buried in the coffee can in the back yard has a money velocity of zero.)
As Joseph noted, the correlation between the percentage of people working and money velocity was strong until 2010. In the post-2009 recession "recovery," the percentage of the populace with jobs rose modestly, but money velocity absolutely cratered to unprecedented lows.