Confirmation of my analyses…

Publié le par Jean-Pierre Chevallier

Confirmation of my analyses…


The latest figures released by the Fed on January, 31 (and those of the GDP growth) confirm my previous analyses: the increase in the aggregate M2-M1 is slightly less than 7% (from one year to another) on January 21, which means that real GDP growth is 3.5% (year on year) in the beginning of this year, i.e. at its optimum potential.

Chart 1:
2008.02.01.US.1.M2M1.gif
 (Click here to enlarge the graph)

The trend is now well established as the increase in M2-M1 was less than 7% for 4 consecutive weeks.

Americans continue to well react: they work, make money and spend it, which maintains the growth. The fundamentals are good.

As real GDP growth is inversely proportional to the variation of the free money supply in M2-M1 (decreasing), growth is picking up spontaneously,

Chart 2:
2008.02.01.US.2.FRM.07.gif
(Click here to enlarge the graph)

The rate of real GDP growth in the fourth quarter 2007 was 2.5% year on year in accordance with my predictions but 0.6% over the previous quarter to an annualized rate compared with 0.7% for my predictions (!).

Real GDP growth varies with the inverse of the variance of the free money supply for recent quarters, as for more than 50 years…
Chart 3:
2008.02.01.US.3.FRM.05.gif
(Click here to enlarge the graph)

The observation of changes in monetary aggregates is really the best indicator of future economic activity for 50 years…

Chart 4:
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(Click here to enlarge the graph)
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