As I recall, there were two things that the consensus totally did not internalize about the early part of this cyclical recovery.
First, the part of the economy that forms the top line for the corporate sector enjoyed a normal cyclical boom, even though the overall GDP grew very slowly. Basically, goods GDP — in which the corporate sector is overweight — roared off its deeply-depressed low, just as it almost always does. Largely for this reason, corporate GDP was also quite strong and the profit boom was NOT just about financial engineering or margins, although they helped.
Second, as Jason Benderly explained very presciently, with “automatic deleveraging” we could have a strong recovery of credit-sensitive demand (basically for goods) even as credit itself contracted or experienced a very slow growth rate. People were so mesmerized by the crisis and beholden to the deleveraging thesis that they totally overlooked what was really grade school arithmetic. (Bridgewater was egregious on this and then went slippery, with “beautiful” deleveraging. Better dishonest than committed to being wrong.)
Deepest congrats to Jason for looking past the drama, doing the arithmetic, and being right for the right reason. A corollary of Jason’s insight, as I have earlier pointed out, is that goods demand is more likely to recover when that result does not require strong credit growth. Jason was not all over that, but it was one reason I never bought the “stall speed”, a growth rate at which we grew for eight years in a row! LOL. Maybe try another metaphor, eh?
But we are now past that sweet spot, because goods demand has been strong for a while and automatic deleveraging has been replaced, predictably, by releveraging. This means that the recent credit slowdown was probably transitory, related to a stock adjustment in the energy patch and in inventories, AND that growth of goods demand (e.g. for autos) should now be more credit-sensitive/intensive. This is “bullish” for lending from a demand perspective but “bearish” (at risk of too strong a word) for an economic boom from here.
So far as I can tell, there may still be a bit of pent-up demand for autos. It is a tough call because the traditional metrics suggest there should be, but cultural (i.e. structural) forces may be going in the other direction. Anyhow, that is the context in which I would interpret today’s auto figures, over which the bears are making such great hay.
Apparently, part of making America great again is walking! Don Trump, the Gawdfather, could use to drop a couple dozen pounds at least.
I too am trying to slim down. Dropped 12 to 15 pounds in the past month. Also family Beinn Bhiorach is down one car, although that is more an income (which is zero) thing. Plus I don’t live in a walking town. People here can’t drive either, but that is separate.