The Jiffy Pop Economy, Part IAugust 08, 2013 Posted by: Joe Morgan
The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates
For me, Jiffy Pop was always a treat. We never had it at home, but we always had it at the campsite. It was a certainty just like picnic tables, a camper on its last leg, and a screaming desire to return home long before the week was out.
Jiffy Pop was fun because you could hear it popping with anticipation building as the foil cover began to expand. The first pop begins a march to the familiar convexity that held back the joy that is popcorn. With each additional burst the foil pushes just a little further until all the kernals have done their duty. The foil does its job holding the corn in, avoiding any spillage at the campsite.
Today's economy is much like those kernals popping and pushing against the the foil barrier. We remain in the early stages of economic growth with only some indication that the corn is popping. The barrier sturdily retains the kernel energy, keeping the economy on more of a low simmer. In short, the foil is holding us back.
Over the next few weeks, I will use this analogy to describe the economy's current situation, potential strength, challenges, and what we - as a society - need to do in order to unleash its full potential. This week, I will focus on the current state.
People like to simplify this question: is it strong or is it weak? But this presupposes some relative measure of activity. Therefore, it is important to understand where the economy has been before we can understand its current strength or lack thereof.
Growth in GDP over the last several decades has been rising steadily - recession or not - until 2008 when the economy dipped. It then recovered its upward trajectory, but not the prior trend level.
Source: Bloomberg, SVB Asset Management
Other indicators of the economy's strength have also faltered, primarily centered around employment-related statistics. Specifically, we now have the lowest percent of the population working...Read More