Most Popular
1. It’s a New Macro, the Gold Market Knows It, But Dead Men Walking Do Not (yet)- Gary_Tanashian
2.Stock Market Presidential Election Cycle Seasonal Trend Analysis - Nadeem_Walayat
3. Bitcoin S&P Pattern - Nadeem_Walayat
4.Nvidia Blow Off Top - Flying High like the Phoenix too Close to the Sun - Nadeem_Walayat
4.U.S. financial market’s “Weimar phase” impact to your fiat and digital assets - Raymond_Matison
5. How to Profit from the Global Warming ClImate Change Mega Death Trend - Part1 - Nadeem_Walayat
7.Bitcoin Gravy Train Trend Forecast 2024 - - Nadeem_Walayat
8.The Bond Trade and Interest Rates - Nadeem_Walayat
9.It’s Easy to Scream Stocks Bubble! - Stephen_McBride
10.Fed’s Next Intertest Rate Move might not align with popular consensus - Richard_Mills
Last 7 days
Stocks, Bitcoin and Crypto Markets Breaking Bad on Donald Trump Pump - 21st Nov 24
Gold Price To Re-Test $2,700 - 21st Nov 24
Stock Market Sentiment Speaks: This Is My Strong Warning To You - 21st Nov 24
Financial Crisis 2025 - This is Going to Shock People! - 21st Nov 24
Dubai Deluge - AI Tech Stocks Earnings Correction Opportunities - 18th Nov 24
Why President Trump Has NO Real Power - Deep State Military Industrial Complex - 8th Nov 24
Social Grant Increases and Serge Belamant Amid South Africa's New Political Landscape - 8th Nov 24
Is Forex Worth It? - 8th Nov 24
Nvidia Numero Uno in Count Down to President Donald Pump Election Victory - 5th Nov 24
Trump or Harris - Who Wins US Presidential Election 2024 Forecast Prediction - 5th Nov 24
Stock Market Brief in Count Down to US Election Result 2024 - 3rd Nov 24
Gold Stocks’ Winter Rally 2024 - 3rd Nov 24
Why Countdown to U.S. Recession is Underway - 3rd Nov 24
Stock Market Trend Forecast to Jan 2025 - 2nd Nov 24
President Donald PUMP Forecast to Win US Presidential Election 2024 - 1st Nov 24
At These Levels, Buying Silver Is Like Getting It At $5 In 2003 - 28th Oct 24
Nvidia Numero Uno Selling Shovels in the AI Gold Rush - 28th Oct 24
The Future of Online Casinos - 28th Oct 24
Panic in the Air As Stock Market Correction Delivers Deep Opps in AI Tech Stocks - 27th Oct 24
Stocks, Bitcoin, Crypto's Counting Down to President Donald Pump! - 27th Oct 24
UK Budget 2024 - What to do Before 30th Oct - Pensions and ISA's - 27th Oct 24
7 Days of Crypto Opportunities Starts NOW - 27th Oct 24
The Power Law in Venture Capital: How Visionary Investors Like Yuri Milner Have Shaped the Future - 27th Oct 24
This Points To Significantly Higher Silver Prices - 27th Oct 24

Market Oracle FREE Newsletter

How to Protect your Wealth by Investing in AI Tech Stocks

Long Term Change from Average Earnings Growth above RPI to AEI below RPI

Economics / Earnings Mar 07, 2014 - 02:30 PM GMT

By: Jonathan_Davis

Economics

There are many reasons why the evidence is building that we, in the West, may be #TurningJapanese (it’s a Twitterese I coined). Japan experienced deflation for over 20 years, had a generational depression and stocks and property fell 80%, from 1989 to 2012.


It is by no means confirmed yet. Just that the evidence is building.

The above shows UK average earnings’ growth (in green) and The Retail Price Index (in yellow) over the last 50 years in the UK. The furthest right entry I added manually as the original ONS chart went up to March 2013. The chart now goes to December 2013. I hope you can see that until 2007, almost entirely during the prior 45 or so years, earnings’ growth outpaced the costs of living.

Inflationary.

Since 2008 the annual rises in the costs of living have been higher than earnings’ growth. So, think about that…for 45 years earnings almost always grew faster than costs. Now it is the other way around.If household spending has to be curtailed because costs are rising faster than incomes, this is net deflationary. It does not bode well.

I have been saying for several years that the game changer would be soon and then, from 2008, I have been saying we are seeing the game changing. This is yet more evidence that whatever those above the age of 50 or so experienced for ‘ever’ from the 70s through to the 2000s is over and – ever so gradually – reversing. Whatever the baby boomers experienced is NOT what their kids are experiencing or will experience. I think this chart is so crucial to the potentially ‘moving-into-a-depression’ thesis.

I was on with Robert Elms on BBC Radio London at the weekend, talking about whether or not going to University is worth it.

(My view is, unless studying vocationally for a high earning career, or going to a top Uni and getting a great grade, it’s not worth the paper it’s written on. You often don’t get a well paid job AND you are lumbered with £30-40,000 of debt!!!)

He replied something like ‘very interesting but quite wrong.’ He trotted out the usual crap that studies show that graduates earn £x00,000 more than non-graduates. I had to point out the bleeding obvious that that relates to graduates 30-40 years ago. NOT THE CURRENT CROP! This is how the (very highly paid Socialist / no charge educated) media thinks.

#BringBackCapitalism

By Jonathan Davis

http://jonathandaviswm.wordpress.com/

25+ year veteran of the world of financial services, the last 10 doing the same thing under his own name.  We work with families all over the UK and in Switzerland and, indeed, on 2 other continents. If interested in our Wealth Management work, cast a glance at the firm’s website.

From time to time media folk call me and ask me to rant live or in the press.  JD in the media.

I don’t buy hype.  I don’t believe it’s the end of the world but I do believe, within a generation, the West will have no welfare state.  The maths don’t lie.  We’re toast.  It’s obvious if you think about it.

© 2014 Copyright Jonathan Davis - All Rights Reserved

Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.


© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.


Post Comment

Only logged in users are allowed to post comments. Register/ Log in