« Reviving the Knife-Edge with Effective Demand, response to JW Mason | Main | Response to "Dancing in the Dark" by Rob Johnson at INET »



Feed You can follow this conversation by subscribing to the comment feed for this post.

re: http://effectivedemand.typepad.com/ed/2013/04/effective-demand-increases-with-unemployment-huh-no-that-cant-be.html

Would it be correct to characterize this definition of effective demand as:

The demand that *would* exist if all these measures were unchanged, but capital and labor were fully utilized? I don't think that's quite right (?), but I'm trying for a formulation that's easier for people to wrap their brains around.

So it's actual GDP (revealed demand?) + "uncreated" demand? (i.e. uncreated by producers hiring and investing, not reaching for available but unrevealed demand?)

Hi Edward:

Are you seeing comments here? Replying? I think you've approved one of mine, but others have never appeared.



Ah, there they are. I also wonder about a further split -- capital/labor, yeah, but how about splitting capital into "real" and financial? cf the Income Distribution graph here:


And the financial vs. nonfinancial graph here:


I have a sense that lending/borrowing/debt are hidden and happening here in your model, but maybe not explicitly?

The comments to this entry are closed.

Data as of 3rdQ-2018
Effective Demand = $18.433 trillion
Real GDP = $18.671 trillion
Productive Capacity = $24.872 trillion
UT index is at effective demand limit = -0.92%
Effective demand limit = 74.1%
TFUR = 75.1%
ED Fed rate rule = 4.0%
Estimated Natural Real Interest rate = 2.3%
Short-term real interest rate = 2.8%

There is no recession for 3rdQ-2018. Chance of recession is growing as economy has now reached 2nd effective demand limit in this business cycle. I am forecasting that economic conditions will begin to contract in the second half of 2018.

Click on Graphs below to see updated data at FRED.

UT Index (measure of slack):

The UT Index



z derivatives in terms of labor & capital:

z derivatives in terms of labor & capital

Effective Demand, real GDP & Potential GDP:

ED, real GDP & pot rGDP

ED Output Gap:

ED Output gap

Corporate profit rate over real cost of money:

Corp profit rate over real cost of money

Exponential decay of Inflation:

Corporate profits impact Inflation

Measures of Inflation:

Measures of Inflation

YoY Employment change:

YoY employment change

Speed of consuming slack: yoy monthly:

Speed of consuming slack

Speed of consuming slack: quarterly:

Speed of consuming slack quarterly

Real consumption per Employee:

real consumption per employee 2

Will real wages ever rise faster than productivity?:

Productivity & Real Wages



Productivity against Effective Demand limit:

Prod & ED limit

Bottom of Initial Claims?:

Initial claims

Tracking inflation expectations:

Fisher effect?

M2 velocity still falling:

Measures of Inflation

All in one:

All in one

Double checking labor share with unit labor costs & inflation:

My Photo
Edward Lambert: Independent Researcher on Effective Demand. Graduate of Atlantic International University where independent research was developed.
Some links for economic analysis
Fed Views - San Francisco Fed, around 10th of each month.
Well's Fargo monthly - around 10th of each month
Well's Fargo weekly
Well's Fargo Interest rate report
Well's Fargo Economic indicators
T. Rowe Price weekly market wrap-up
Blog powered by Typepad
Member since 03/2013