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What’s your model on how real GDP grows durably?

Credit Writedowns·Edward Harrison·about 1 month ago
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Quick note here to follow up on the macro crystal ball post I wrote a couple of weeks ago ( link here for subs ). Michael Msika over at Bloomberg had a piece out on the return of capex powering the next rally. And for me it connected a lot of dots. Let me outline my thinking below. What I wrote in the macro crystal ball piece was this: there is a sequencing that I am looking for though. The sequence goes from consumers’ wages to consumption to industrial production to capital spending and corporate profits. That means wages should be key to the strength and durability of a recovery. While employment and capital spending are lagging indicators, rather than drivers of the business cycle. So, in the wake of massive government transfers that have kept household balance sheets intact, we can look to employment trends to judge whether this cycle has legs.…

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