Looking at the drivers of the global economy, long term with charts

Update from the presentation at Nedbank in 2012, with fresh data. Content below.

  1. Debt – debt clock, per capita, %GDP, Tax/GDP
  2. Interest – JPY, US, UK, EUR, RSA
  3. Inflation – JPY, US, EU, RSA
  4. Markets – LT Nikkei, S&P, US 30yr, JSE
  5. Other – JPY unemployment, EU inflation, US CPI, Case Schiller HPI

Group of Twenty

Argentina Australia Brazil China France Germany India Indonesia Italy Japan Mexico Russian Federation Saudi Arabia South Africa Korea, Democratic People's Republic of Turkey United Kingdom United States European Union

The G20 (or G-20 or Group of Twenty) is an international forum for the governments and centrals banks from Argentina, Australia, Brazil, China, France, Germany, India, Indonesia, Italy, Japan, Mexico, Russian Federation, Saudi Arabia, South Africa, South Korea, Turkey, UK, US and EU. The G20 was founded in 1999 and aims to address policies to promote international financial stability.

US Debt Clock

Zoom out – it’s huge, over $62k per citizen, or $168k per taxpayer at $20.3 trillion in total. So their debt is roughly 6x the amount collected from tax revenue. Healthy? Certainly not.

Debt per capita

Which country is most in debt?

Debt as a % of GDP

How big is their debt compared to annual output?

 

Tax revenue as % of GDP

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Interest rates

Japan Japanese interest rate 1970’s to date

More stable and now below zero (by 1/10th of a percent)

United States US interest rate 1970’s to date

On the up since 2016

United Kingdom UK interest rate 1970’s to date

Came down a lot, just above zero (¼%)

European Union Eurozone interest rate 1990’s to date

Flat-lined at zero

South Africa South African interest rate 1990’s to date

More stable recently

Inflation

Inflation is a general increase in prices, over time

Japan Japanese inflation since the 1960’s

Frequent and continuous periods of deflation

United States US inflation over more than a century

Also dipped into negative around 2015

European Union Eurozone inflation since the 1990’s

Generally around 2%

South Africa South African inflation since the 1970’s

No deflation here…

Markets

Japan Nikkei long term chart

Since 1949 – a log chart of the Nikkei 225

United States S&P long term chart

Since 1928 – a log chart with recessions shaded below

United States S&P annual returns

Some stats – over the 90 observations there were 60 up years (two-thirds) and 28 down years (on-third), giving a ratio of 2.14:1 up-to-down years, with the biggest up year 47% (in 1931) and the biggest down year -47% (in 1933) and an average annual return of 7.5% (rounded).

If we run the same stats over the last 50 years, there were 37 up and 12 down years, for a 75% vs 25% split, giving 3:1 up-to-down years, with the best return (34%) in 1995 and the worst (-39%) in 2008 and an average annual return of 8.1%. Looking better.

South Africa JSE long term chart

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US 30yr bond yield

No points for seeing where this is going.

From Tradingeconomics: United States 30 Year Bond Yield was quoted at 2.88 percent on Wednesday October 11. 30 Year Bond Yield in the United States averaged 6.77 percent from 1977 until 2017, reaching an all time high of 15.21 percent in October of 1981 and a record low of 2.11 percent in July of 2016.

Accreditation, with thanks

  1. Debt clock here
  2. Inlfation & interest rate data from Tradingeconomics
  3. S&P & Nikkei long term charts from Macrotrends
  4. JSE long term data from investing.com

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