Illustrating the story: Same “technique”, different interpretations

David Beckworth and I have for a long time been using a charting technique that purports to show, explicitly, that the economy is “slogging”, not “recovering”. Now I see that Tim Duy is doing the same, but his interpretation is different, influenced by the standard “growth bias”, abstaining from considering the levels difference:

The 0.5% gain in February compensated for some earlier weakness in the numbers, while the overall trend holds – spending is rising about 0.18 percent per month compared to 0.24 percent prior to the recession.  Spending was supported by a drop in the saving rate, down to 3.7% from 4.3% the previous month.  This likely reflects borrowing for new auto purchases – note the stronger trend in durable goods spending:

The acceleration in auto sales is clearly supporting this trend since the middle of last year.  Apparently, what’s good for Detroit is still good for America. The importance of autos in sustaining spending begs the question of what will occur when pent up demand is satisfied?  Obviously, auto sales will stop contributing positively to growth as sales level off at some point in what I would expect to be the not too distant future.

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