Bank CD rates...WTF?

[Yo_Mama]

87. In a macro sense that is an excellent analysis

Basically, the large companies are sustaining profits while undercutting the base.

However from a purely econ-stat perspective, it is easy to see what is happening. From NIPA table 1.8.6, we can see that the peak for real command basis net domestic product peaked at 11,579 in Q3 2007. In Q-1 2013 (5 and 1/2 years later) it had only slightly exceeded that high at 11,837. Yet corporate profits are going sky-high on essentially the same revenue base.

This won't continue. From Table 7.1 we see that real per capita disposable income (income less taxes) peaked in Q1 2008 at 33,826 and in Q1 2013 (5 years later) stands at 32,640. This is not going to end up well! The quarter before, which still incorporated the FICA payroll tax cut and was boosted by pre-tax increase extra dividends and bonus payments was at 33,138, still well off the peak.

You cannot have a situation in which real aggregate per capita income keeps dropping and corporate profits keep going up. It does not work. It leads to deflation in one way or another.

One clue as to what is happening is that companies are missing revenue estimates even as they are exceeding profit estimates.

It is very obvious that the per-dollar feed-through gain from the Fed's money-throwing is dropping. Will they ratchet it up to 100 billion a month? I agree that CPI is a joke, but even that is now dropping, which points to the difficulty of averting disinflation with dropping real purchasing power among the majority of households.

There is only one sure effect of the Fed's actions - it increases income inequality:


Countries with high Gini ratios have unstable social environments and tend to have poor long term economic stability and unstable currencies.

Well, wtf, wholesale inventories/sales ratio is back to 1.21 in March, which generally sparks a correction. It's kind of obvious that that this would happen, given lower real disposable incomes:
http://www2.census.gov/wholesale/pdf/mwts/currentwhl.pdf

And we are at the danger line there - last year when it came close to 1.20 we had the manufacturing slowdown, as purchases needed to clear. So we are set for another summer of SLOW, which I do not think is going to do much for US incomes. The US consumer frog is in slowly heating water.