Metrics: Replace GDP with Disposable Energy
Disposable Energy is much energy people can buy with their take-home-pay.
This is a simple version based on how much gasoline people could buy with their take-home-pay, normalized to 1986. Disposable Energy is compared with GDP. Note GDP barely registered the 1973 Oil Embargo, 1979 Iran Crisis, and 2008 Great Recession. Disposable Energy began warning of the 2008 crisis in 1998.
The economy is like a flywheel. Affordable energy and labor are inputs that build momentum. Debt burdens, rising energy costs, taxes drag on the momentum.
Disposable Energy is a forward-looking metric of how much labor can be purchased to apply energy to pursue happiness. In contrast, GDP is backward-looking and confused by governments money printing and debt spending.
Unemployment follows increasing energy costs.
Recession/depression follows increasing energy costs.
Dallas Federal Reserve warning on jumps in energy prices, a replay of 2008.
Monday, October 21, 2013