{"id":45621,"date":"2019-04-24T10:52:51","date_gmt":"2019-04-24T15:52:51","guid":{"rendered":"https:\/\/olduvai.ca\/?p=45621"},"modified":"2019-04-24T10:52:53","modified_gmt":"2019-04-24T15:52:53","slug":"wealth-bubble-leaves-u-s-economy-in-uncharted-territory","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=45621","title":{"rendered":"Wealth Bubble Leaves U.S. Economy in Uncharted Territory"},"content":{"rendered":"\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" src=\"https:\/\/www.birchgold.com\/wp-content\/uploads\/wealth-bubble-4-19-19.png\" alt=\"wealth bubble\" class=\"wp-image-14737\"\/><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\"><strong><a href=\"https:\/\/www.birchgold.com\/news\/wealth-bubble-leaves-us-economy-in-uncharted-territory\/\">Wealth Bubble Leaves U.S. Economy in Uncharted Territory<\/a><\/strong><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">There have been numerous signs that the U.S. is likely to go through another\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/www.birchgold.com\/news\/imminent-recession-risk-doubled-3-signals-sounding-alarm\/\" target=\"_blank\">major recession<\/a>\u00a0at some point. And regardless of when or if a recession happens, it won\u2019t change the fact that the U.S. economy is already in hot water.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">At&nbsp;<a href=\"https:\/\/www.marketwatch.com\/story\/theres-no-safe-place-to-hide-from-the-consequences-of-the-biggest-bubble-yet-2019-04-15?mod=economy-politics\" target=\"_blank\" rel=\"noreferrer noopener\">MarketWatch<\/a>, the \u201chot water\u201d is explained in terms of a U.S. \u201cwealth bubble\u201d that reveals a peculiar pattern:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>Today the United States sits in the midst of the largest wealth bubble in post-World War II history, as measured by household net worth (or wealth) relative to gross domestic product. As I showed in detail recently in the Journal of Business Economics, only two other postwar bubbles come close, with peaks in 1999 and 2006, just prior to the tech stock crash and the Great Recession.<\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">The largest wealth bubble (household net worth relative to GDP) is shown in a chart from the same article. (Shaded areas are recessions):<\/p>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/www.birchgold.com\/wp-content\/uploads\/wealth-bubble.png\" alt=\"wealth bubble\" class=\"wp-image-14733\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">As you can see at the bottom, the wealth bubble is \u201c5 times the size\u201d of the GDP.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But notice how the wealth bubble \u201cpops\u201d just before the 2000 and 2008 recessions. If you look at the end of the blue line, it appears the largest wealth bubble since World War II may&nbsp;<em>already<\/em>&nbsp;be popping.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Also notice how the green line dips before the 2000 tech stock \u201crecession,\u201d and the red line before the 2008 recession (caused mainly by subprime mortgages).<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">But according to the MarketWatch&nbsp;<a href=\"https:\/\/www.marketwatch.com\/story\/theres-no-safe-place-to-hide-from-the-consequences-of-the-biggest-bubble-yet-2019-04-15?mod=economy-politics\" target=\"_blank\" rel=\"noreferrer noopener\">report<\/a>, there\u2019s another crucial detail to point out:<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\"><p>In both prior bubbles, the crashes led to a drop in the value of net worth to about 4 times GDP. Even that level remained high relative to prior history, since in no single quarter before 1998 had the household net worth-to-GDP ratio ever reached 4.0 or higher.<\/p><\/blockquote>\n\n\n\n<p class=\"wp-block-paragraph\">With that being said, according to the chart above:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Wealth Bubble Leaves U.S. Economy in Uncharted Territory There have been numerous signs that the U.S. is likely to go through another\u00a0major recession\u00a0at some point. And regardless of when or if a recession happens, it won\u2019t change the fact that the U.S. economy is already in hot water. At&nbsp;MarketWatch, the \u201chot water\u201d is explained in [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[18769,3920,1264,25701],"class_list":["post-45621","post","type-post","status-publish","format-standard","hentry","category-economics","tag-birch-gold-group","tag-financial-bubble","tag-recession","tag-wealth-bubble"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45621","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=45621"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45621\/revisions"}],"predecessor-version":[{"id":45622,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/45621\/revisions\/45622"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=45621"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=45621"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=45621"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}