“If you actually look at the income side of the statement, where's the money going that is basically being thrown off by this fast-growing economy? Real disposable income, the money that ordinary folks are holding on to after their taxes, it's only growing around 1.5% after inflation. That's half the rate of economic growth. Why the difference? Because so much of this economic growth is investment. It's AI, it's profits. It's not trickling down to ordinary workers.”
sputnikintelligence.com
Discussing the week's strong GDP figures, the economics commentator points to the income side of the data to explain why people are unhappy with an economy that looks good on paper.
…mean that the destination is not the same as Dallas Fed President Laurie Logan put it. She still thinks that the Fed is going to need to raise rates at least two more times, which suggests that. That they are on track to probably raise rates at their final meeting of the year in December. Right.
Okay. Greg, let's talk data. GDP came out earlier this week. We got PCE at 3.6%. Economy's growing, but so are prices.
Yep. You know, it was a great quarter for the economy, 3.4% annual rate, best in a year. If you actually look under the hood, there are some measures of the demand growing around 5% best in three or four years. It's an economy that's not just strong, but it's accelerating. But, Kai, the thing that I find striking is that if you actually look at the income side of the statement, you know, where's the money going that is basically being thrown off by this fast-growing economy? Real disposable income, the money that ordinary folks out there are holding on to after their taxes and everything like that, it's only growing around 1.5% after inflation. That's half the rate of economic growth. Why the difference? Because so much of this economic growth is investment. It's AI, it's profits. It's not trickling down to ordinary workers. And I think that explains why people are so unhappy about the economy now, even though the numbers tell us it's doing really well.
Yeah. All right. So we'll get to AI in just a second. Kate Davidson did want to talk for a second about something the chairman mentioned a couple of three or four times in his 32-ish minutes of the press conference. He talked a lot about financial conditions and how it's tightening a little bit.…
Right. There had been that idea sort of out there. And that's something that's been talked about in the past. When we have seen a run-up in yields, as we've seen this year, Fed officials have at times previously said, well, this is helpful to us. And they might have broached, a couple that might…
Just so the listeners are clear, financial conditions being a tailwind means they are not restrictive enough, right? They're not holding back economic activity.