Marginal Propensities

The marginal propensity to save, invest, or consume drive the direction of the economy.

We can very clearly see the relationship between saving and investing here:

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It is very visible that these two series are inexorably linked, and share two sides of an equilibrium that shifts once one side is too heavy.

This can be viewed directly when viewed as a ratio — it is a clear manifestation of the unemployment rate:

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So, the question is — around turning points, what drives the marginal propensity to save to invest, and vice versa?  An indication seems to end-demand:

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That’s a lot of unformed capital remaining for the present rate of demand growth.

With corporate earnings and margins at and near record highs, it seems that corporate owners of that cash-pile are slowly resigning themselves to invest at least some of it despite weak sentiment.

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