The data for October and November showed an encouraging continuation of the positive trend in domestic spending that was reported in the third quarter. In the household sector, purchases of new motor vehicles rose further in November, and other retail spending posted solid increases in recent months.
The second Gorton insight on which this paper builds is the importance of statutory franchise value for the business model viability of at least some kinds of regulated financial entities. Where competition from unregulated entities is permitted, explicitly or de facto, capital and other requirements imposed on regulated firms may shrink margins enough to make them unattractive to investors.