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> I haven't seen US economy this versatile and powerful in a long time, maybe since the 80s.

The big 90s expansion was much better than now.

> 4% growth is huge for the largest economy in the world

Not really; one quarter at a 4.2% annualized rate is nothing to write home about; there was a better single quarter in 2011 and two consecutively in 2014, and neither were particularly gangbusters aside from those blips.

> Bay Area alone is nearly a trillion dollar economy, and has double the growth rate of any other county in US.

“Bay Area” isn't a county, and the Bay Area growth rate over the last year is about double the overall national growth rate, not double the best non-Bay county (it's about the same growth rate as Washington State—not the top county in the state, but the state overall.)

The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising.

Anecdotally, I am seeing more help wanted signs on retail and restaurants near me, but my friends who work those jobs are moving _farther_ away from work due to increasing rent without increasing pay. That doesn't seem sustainable

Could you link something that supports your opinion?

As for me: US consumer confidence surges in August to 18 year high. https://www.theguardian.com/business/2018/aug/29/us-economy-.... Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline

Wage data is well-tracked and is shown to be growing more slowly than inflation. It's possible the high growth in nominal wages are engendering some good feelings, but actual purchasing power is dropping.

https://www.washingtonpost.com/amphtml/business/2018/07/12/i...

While it's true that wage growth has been slower during since 2009 than in previous business cycles, it's false that real wages have actually gone down (it's up about 1-4% since the end of the last recession depending on how you measure[1]). Additionally, benefits have grown quite a bit over the long term, which makes looking at just wages misleading. If you look at total compensation, we've seen a 60% increase since the beginning of the 70s and about 30% since the 90s[2].

Slightly off topic, but I also found it interesting that net transfers (e.g. from the government) also make up a much larger percentage of total household income than they used to (growing from 5% in 1950 to about 17% now[3].)

[1] https://fred.stlouisfed.org/graph/?g=l1e2

[2] https://fred.stlouisfed.org/graph/?g=74dI

[3] https://fred.stlouisfed.org/graph/?g=7rNW

Indeed the cost of benefits has risen precipitously while the value has dropped. White-collar professionals are insulated from this by a combination of much greater employer contribution ratios and a healthier risk pool.

I had read an article claiming that the major source of government transfers were due to a much larger percentage of people being on Social Security disability. The causes are a mix of improvement in the enrollment process and a loss of jobs in regions that experience lower migration. I could be misremembering aspects of this so I won't be shocked if someone disputes this.

Anecdotally, I feel as though the trend amongst my friends and family has been that the cost of benefits has increased, while the benefits themselves have contracted. I'm lucky to work at a fairly young company where we get nice health insurance options, but even so, our sick leave policy leaves something to be desired.

What you should be looking at is total compensation. Wages plus non-wage benefits. It’s been growing over the last few decades and out pacing inflation.

The down side is a lot of that is medical insurance where most people don’t see a benefit from the higher expenditure.

Given that so much of it is medical insurance, why is that what you should be looking at?

Because you're still getting paid it.

If it doesn’t make you better off, what’s the point?

If paying more for medical care isn't getting you better medical care, making you being better off, then the problem is elsewhere. Not stagnant income.

Going off what the other poster said, when you don't see a benefit from the system you don't really care about the reason why. When a large portion of society doesn't see a benefit from the system, they're not really gonna care that the economy is "better than ever" and ar going to start engaging in activity that the current economic/social system finds destructive, because they will be trying to replace that system

The ultimate point here is that economic gains aren’t improving things for the average person. The exact reason for that is secondary.

If medical costs go up, that factors in to inflation.

My theory is that people are moving up to better jobs, after years of job training, education, and depressed demands, after 2008. Which would explain the low unemployment rate. Thus even though the wages for some industries are stagnating/declining, people are moving to better job positions, and thus have more money to spend.

Probably has nothing to do with all the credit consumers and businesses are running up:

https://www.cnbc.com/2018/05/21/consumer-debt-is-set-to-reac...

https://www.washingtonpost.com/business/economy/beware-the-m...

No in fact it doesn't. American households are in tremendous shape compared to many of their peers. The household debt burden is at a 15 1/2 year low (household debt as a share of disposable income). [1]

Unlike the fake boom of 2004-2008, this one isn't built on a large expansion of household debt. Businesses have levered up some, however business profits are at an all-time high and debt accumulation began to decline in the most recent quarter (the tax changes + Fed rate policies should continue to push toward a decline; companies like Microsoft, Apple and others took on immense debt temporarily to use it to pay out profits to shareholders via debt rather than repatriate their cash at a high tax rate).

In fact, the single most interesting thing about this economic expansion, is that we haven't seen a big increase in household debt accumulation vs income, compared to the prior three major expansions (late 1980s, mid to late 1990s, and mid 2000s). That either implies consumers are skittish about unnecessarily taking on debt (trauma from the great recession, very plausible), or there's another very big leg left in this expansion (which would be fueled by debt).

"With personal disposable incomes at a $15.46 trillion annual rate in the quarter, the debt-to-income ratio dipped to 86%. That’s the lowest, by an admittedly small amount, since the fourth quarter of 2002. At the height of the credit bubble in 2008, debts topped at 116% of disposable income."

Household debt service payments as a share of disposable income is extremely low, near the lows of the last 40 years:

https://fred.stlouisfed.org/series/TDSP

[1] https://www.marketwatch.com/story/households-in-best-positio...

Do you have data? That sounds like speculation.

https://www.frbatlanta.org/chcs/wage-growth-tracker.aspx

>> The economy is growing but it doesn't appear to actually be flowing back into most citizens pockets. The unemployment rate is very low but wages aren't rising.

> Could you link something that supports your opinion?

This does: Are Superstar Firms and Amazon Effects Reshaping the Economy? (https://www.nytimes.com/2018/08/25/upshot/big-corporations-i...)

> The biggest companies may be influencing things like inflation and wage growth, possibly at the expense of central bankers’ power to do so.

"Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline"

Debt, leverage, credit cards, loans, home equity lines, etc.

Perhaps 2007 is a great teacher about overleveraged consumers "spending money in their pockets".

It wasn't real, sustainable, and ended terribly.

> Consumers wouldn't be spending if they didn't have extra cash in their pocket, and they expect the economy to stagnate/decline

Cash... or credit. Americans currently hold around $3.6 trillion in credit cards and auto/student loans - those types of credit can hinder long-term growth.

And the CCI is not a predictive metric. Consumers don't consider the economy in their purchasing decisions unless the media has given them reason to be concerned... if they're even paying attention to news at all.

I'm also curious how CCI is influenced by lowering expectations - if populations have been struggling to find jobs for the past 4 years, how do people answer?

> Consumers wouldn't be spending if they didn't have extra cash in their pocket

The entire credit industry would beg to differ.

That's why the traffic is so damn awful now ... people are having to travel further out of the cities to find affordable housing, but the high paying jobs are in the cities.

>The unemployment rate is very low but wages aren't rising.

...yet.

Wages are a driver of inflation, which will rear its head as we reach late cycle. Then we blow up and start over. This is the way of the world.

I’ve been trying to learn a little about economics. Do you have any favorite economists, etc that you follow? I’m trying to learn more about the interaction of QE, rising fed rates, growing deficits, etc.

Basically, I’d like to move beyond the headlines and the spin.

[Update]

Here are some people I try to follow:

Jan Hatzius - Goldman Economist

Robert Schiller

Stephen Roach - Yale Economist https://www.project-syndicate.org/columnist/stephen-s--roach

Jeremy Grantham - GMO

Ray Dalio - Bridgewater

Larry Summers

If you are trying to learn about a subject, then I fully recommend you disregard current popular subject matter experts and focus on learning the basics as that is where you will learn the most especially considering the subject matter experts probably won't make sense if you do not understand the basics.

How each person learns is subjective but I find textbooks are by far the best learning materials so if you are like me, then I would recommend you buy some introductory economic textbooks and read them. I know a lot about economics because I read a few intro economics textbooks and I kept reading new textbooks based on what interested me from previous ones and now I have read over 20.

Great question, thanks for asking!

I like Nikolai Kondratiev, Pettis, Alfred Marshall, Carmen Reinhart, and Bill Gates (read his recent stuff on software economics)

I don't like Krugman and Greenspan.

I'm particularly curious about why you prefer Reinhart over Krugman, specifically because of the disagreement over the famously erroneous Reinhart-Rogoff results (Krugman comment here: https://krugman.blogs.nytimes.com/2013/04/16/reinhart-rogoff.... As far as I know, Reinhart-Rogoff never republished or responded further than what Krugman discussed in the linked post). Specific examples supporting/disproving the case of either would be helpful.

I tend to ignore Krugman when he's talking politics (eg. his prediction of a Trump recession). However, when he goes through the process of laying out the assumptions of an economic model (happens in many of his blog posts labeled 'wonkish'), his discussion of economic consequences of various policies seems to map very well with reality.

>Basically, I’d like to move beyond the headlines and the spin.

Create a Twitter account and get on FinTwit (finance Twitter). Find the people doing real research (you have a couple in your list, Dalio, Grantham, I follow some of the guys from Ritholtz Wealth Management who are active on the platform) and follow their retweets or follows. More information than you can handle.

The Wealth of Humans by Ryan Avent is worth a read to understand the current labour market.

One I just found recently (via it being by far the leader in a recent "other blog" survey on slatestarcodex) is:

https://marginalrevolution.com/about

"Marginal Revolution is the blog of Tyler Cowen and Alex Tabarrok, both of whom teach at George Mason University. MR began in August of 2003 and there have been new posts daily since that time. In numerous reviews and ratings over the years Marginal Revolution has consistently been ranked as the best or one of the best economic blogs on the web, but it is more (and less) than that, also representing the quirks of its authors."

As far as I can tell so far, it seems to be a relatively unbiased, non-ideological commentary on economic news. One interesting article (not from the site itself, but from an "assorted links" post) is this one on NAFTA negotiations:

https://moneymaven.io/baldingsworld/china/chinese-economics-...

Maybe I'm wrong, but as far as I can tell, that sort of perspective is highly unusual in mainstream public economic news. I've certainly never seen many articles on trade policy that go much beyond discussing aggregate GDP.

The SSC survey:

https://www.reddit.com/r/slatestarcodex/comments/9aak39/favo...

Thomas Sowell http://www.tsowell.com/

James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson (the authors of "Economics: Private and Public Choice")

I also have to second the "I don't like Krugman" opinion. Not that predicting the future is ever reliable of course, but his seriously incorrect predictions seem to be clearly motivated by politics. That won't help you understand economics.

> Coupled with the flooding of capital back to US via the reduced expatriation tax rate, US is firing on all cylinders.

What happens when all the money is repatriated and no more dollars left for other countries to import from US?

We win.

Seriously though, you’re asking a fantastic question. And, surprisingly, my tongue in cheek response above is sort of correct. The world was actually in a similar position to the one you ask about right after WWII ended. The world was still on fire and most countries had no real currency to spend. So, we loaned them the money to buy our goods (not much of a services economy back then).

Of course, that’s what we know today as the Marshall plan. In it, we gave billions of dollars of aid to other countries to help them rebuild their infrastructure and economies.

But if that ever happened in peacetime (I.e. not right after a war), then that would be very unusual. Maybe after a worldwide depression, but that is usually followed by war anyway.

Great question, and hopefully we never really find out. It probably would be a very rough ride for lots of people on this planet.

[0] - http://www.history.com/topics/world-war-ii/marshall-plan

> my tongue in cheek response above is sort of correct.

The world is in a very different state now. Most of the manufacturing bases are outside the US. If the US somehow withheld the dollar, most of the world would just switch to alternative currencies and continue to trade with one another.

That of course would most likely never happen in our lifetimes, since the dollar is a key pillar in the American economy and global power projection.

Which other currency? It’s been a bit since I was involved in currency trading but back then that was a huge question.

People wanted out of usd for lots of reasons but the other choices were worse.

Most of the world (and especially China and Mexico) cannot withdraw from the largest market for their goods without their economies totally collapsing. That’s why Trump is going to win his trade wars. Money talks, bullshit walks.

Honestly, that was a toungue in cheek question. This was encountered more recently here: https://www.imf.org/external/about/histdebt.htm

The answer last time was global recession. Mainly because there was no alternative to USA and Soviet Union (which was crumbling). Third world countries were used as pawns.

This time though, most other countries have solid institutions of their own. More likely, they will unite and start trading with each other in other currencies, gradually reducing dependence on dollar and trading with the US.

The bitter truth about the world is that the US was a hero in 80s and 90s. Today, it's a toxic material that everyone deals with simply because of petrodollar.

There is a lot you can criticize Trump about but what he has done with the economy deserves a lot of credit. Just 3 or 4 years ago, economists were saying that we would never see 4% growth ever again and that 1 to 2% growth was the new normal.

> Just 3 or 4 years ago, economists were saying that we would never see 4% growth ever again and that 1 to 2% growth was the new normal.

No, they generally weren't, and any who were saying that we'd never see a quarter of 4% annualized growth rate four years ago (i.e., between the Q2 and Q3 releases of 2014) was especially silly.

US GDP growth by quarter for 2014:

Q1: -1% Q2: +5.1% Q3: +4.9% Q4: +1.9%

While the US economy is doing great, it feels like the US workers are doing worse than ever. Spiraling healthcare costs, unaffordable housing, student debt and a lack of real wage growth are all pinching the middle class out of existence. Unemployment is low, but many of the job gains are in low skill temp positions and the gig economy.

As is usual for the past 20 years, capital is doing great while labor suffers.