We Have Government Purchase and Residential Investment Problems: Double Graph of the Week (Week of January 17, 2014)
Relative to the last business-cycle peak, exports are 1.2% points higher as a share of potential GDP, business equipment investment is 0.3% points lower as a share of potential GDP, residential investment is 1.5% points lower as a share of potential GDP--and 3.5% points lower than at its housing-bubble peak--and government purchases is 2.3% points lower.
And our problem is not that investors think that businesses are so hobbled by regulation that they will be unable to earn healthy profits. The stock market adjusted for inflation stands 3.5 times at its level when Ronald Reagan left office:
The real inflation-adjusted stock market today is the same multiple of its value at the start of 1989 as the market of 1989 was relative to 1886, when that triangulating bastard Grover Cleveland married Frances Folsom in the White House. The last 25 years have seen the same growth in stock market valuations that before it took 103 years to accomplish. You really can't say that regulations are strangling American business and making it a bad time to own capital, can you?
