US Economic Performance

[Toro]

The net worth of US households is $49.8 trillion. That's up 9.4% from a year earlier and from $41.7 trillion in 2000.

http://www.federalreserve.gov/releases/z1/Current/z1r-5.pdf

[August1991]

See data below.

There are two "features" I notice.

1) Overall, the US economy delivers. On an annual basis, real GDP per person grows consistently at or above 1.5% per year. (I believe that that is the average for the past 200 years too. No society ever in history has delivered on such a consistent basis such growth rates. Keep in mind too that the US is largely self-sufficient - international trade is small compared to GDP.)

2) The late 1960s and early 1970s delivered growth well above trend.

[Guest eureka]

Something different

You might find this sirte gives a somewhet different picture. It also suggests that the US does not outperform Canada.

Worth reading.

[Guest eureka]

BMO

Try again

[Toro]

That's an interesting article eureka. Some points from it.

While it is virtually certain that a productivity gap exists between the US and Canada — a host of studies have come to that conclusion — it is difficult to measure with precision.

Why has there been a persistent gap? Unfortunately, our knowledge of the causes of this phenomenon remains incomplete. To be sure, part of the gap can be explained by differences in industrial structures. The Canadian economy is composed more prominently of industries that have lower productivity levels than the US economy. Since the total productivity level is a weighted average of all individual industries, it is reasonable that total measured Canadian productivity would be lower than that of the US. However, this factor does not explain all of the gap.

Should Canada not close the productivity gap? Actually, based on relative growth rates in multifactor productivity in the business sector (see Table 1), we have closed part of the gap since the early 1960s. The even more encouraging news is that the narrowing of the gap appears to have accelerated slightly in the 1980s and 1990s.

Also, it is a fact that economic measures of living standards in Canada have not kept pace with those in the US since the late 1980s. Table 2 shows that growth in real GDP per capita and real personal income per capita (before and after tax) - common measures of economic well being - have fallen behind that in the US since 1988, after tracking, if not exceeding, the US pace through the 1960s, 1970s, and parts of the 1980s. Since 1988, average growth in real GDP per capita has dropped to less than half that in the US. Real personal income per capita, before and after tax, has declined slightly while it has continued to grow south of the border.

If relative productivity growth has not been the culprit, why have Canadian living standards been so sluggish this decade? The answer is that productivity growth is a key, but not the sole determinant of changes in living standards. Over the longer term, growth in productivity will tend to be very closely correlated with real income gains per employed person. However, if growth in the number of people employed deviates significantly from population growth, real per capita income growth will deviate significantly from productivity growth.

IMHO, Canadian economic performace will exceed US performance for the next few years.

[August1991]

Toro, Yaro, what's the diff? Toro, if you want to argue with Yaro, post in the thread where you both have posted. Not here, in this thread, where we are discussing US economic performance - a thread you wisely created, Toro.

The blow-up fonts are symbolic "look at me" adverts. They're boring. I suspect that most Internet viewers ignore them because they are so easy to create. (Hint: Small, intelligent lines are more likely to succeed now.)

Toro and/or Yaro, do you have something to say? Or should I ignore you?

[Montgomery Burns]

Toro, Yaro, what's the diff?  Toro, if you want to argue with Yaro, post in the thread where you both have posted.  Not here, in this thread, where we are discussing US economic performance - a thread you wisely created, Toro.

The blow-up fonts are symbolic "look at me" adverts. They're boring.  I suspect that most Internet viewers ignore them because they are so easy to create.  (Hint: Small, intelligent lines are more likely to succeed now.)

Toro and/or Yaro, do you have something to say?  Or should I ignore you?

<{POST_SNAPBACK}>

Who made you the one who dictates what one can or cannot post on their own thread?

Grow up.

[Toro]

Since August is acting as the thread police, I've moved the offending quote to the appropriate thread.

August, I enjoy your posts, and agree with most of them, but lighten up a bit, man.

Now, back to the issue at hand.

[Toro]

I posted this in the Global Growth thread in the World Politics section, but its probably more appropriate here so I've reposted this

I ran the numbers from the US Bureau of Economic Analysis

http://www.bea.doc.gov/bea/dn/nipaweb/TableView.asp#Mid

US growth rates, annualized

1930-39 0.9%

1940-49 5.6%

1950-59 4.1%

1960-69 4.4%

1970-79 3.2%

1980-89 3.0%

1990-99 3.1%

2000-04 2.6%

Looking at different time periods though, we see a little different picture

1935-44 9.9%

1945-54 1.3%

1955-64 3.8%

1965-74 3.7%

1975-84 3.0%

1985-94 3.0%

1995-04 3.2%

Not much of a difference between the so-called pre- and post-globalization eras, at least not for the United States.

I have argued that one of the reasons why growth was higher earlier in the century is because of increased consumption due to pent-up demand after the Depression and World War II. Here's what consumption looked like since the Depression

1929-35 -1.2%

1935-44 3.9%

1945-54 4.3%

1955-64 3.9%

1965-74 4.1%

1975-84 3.2%

1985-94 3.2%

1995-04 3.7%

Or, looking at through the prism of 1980 as being a demarcation

1930-39 1.0%

1940-49 4.0%

1950-59 3.7%

1960-69 4.4%

1970-79 3.5%

1980-89 3.3%

1990-99 3.3%

2000-04 3.3%

Pent-up demand after the Depression and WWII lasted well into the 1970s. Such long-waves of demand are not uncommon if you study economic history. Its also hard to argue that globalization is a negative factor for consumption when globalization increases choice and lowers costs.

Consumption BTW, has averaged between 60-70% of GDP and is by far the most important factor in the economy.

As any macro econ 101 student learns, GDP = C + I + G + NX

So let's look at investment and government spending

Investment

1930-39 -1.6%

1940-49 7.6%

1950-59 5.2%

1960-69 5.5%

1970-79 4.7%

1980-89 2.5%

1990-99 5.9%

2000-04 2.0%

or

1935-74 6.0%

1975-04 4.2%

Investment slowed. But how can that be when investors are supposed to be the big benefactors of globalization?

Government spending

1930-39 5.0% (War, New Deal)

1940-49 7.5% (War)

1950-59 5.8% (GOP President)

1960-69 3.8% (Democrat)

1970-79 0.5% (Nixon/Carter, decleration from Vietnam war spending)

1980-89 3.1% (Reagan/Bush)

1990-99 1.3% (Slick Willie, Dem)

2000-04 3.0% (W, GOP)

So much for the GOP being the stewards of the purse strings. Spending has accelerated faster under Republican administrations since WWII than Democrat.

Or

1946-74 3.4%

1975-04 2.3%

So the conclusion that we draw from the US economy anyways is that its hard to say that "globalization" has lead to a slowdown in the economy. It has more to do with consumption slowdown after the long-wave of pent-up demand from the Depression and the war faded, and, less important, slower government spending.

[August1991]

Who made you the one who dictates what one can or cannot post on their own thread?

Self-appointed. I didn't know that the creator owns the thread.

Since August is acting as the thread police, I've moved the offending quote to the appropriate thread.

August, I enjoy your posts, and agree with most of them, but lighten up a bit, man.

Now, back to the issue at hand.

<{POST_SNAPBACK}>

Fair point. I was offended primarily by the big fonts since I too have been guilty of thread drift. But thread drift on the third post is a little much.

----

Toro, I can't really see any significant facts in the data you have posted above. I am reminded that it takes years for a government's decisions to take effect. I am also reminded that power in the US is diffused. Even the President cannot change much.

Your data seems to show that growth was slightly higher in the 1950s and 1960s than in the 1980s and 1990s but the differences could be due to population and labour force. (Your data is not per capita.)

It is also apparent that government spending varies but in general is rising faster than economic growth. A case could be made that the rise of government has caused the slight slow down in economic growth.

[Toro]

August

The point is that growth in the economy has been pretty consistent over time. It was originally in the context of how globalization supposedly wrecked the US economy. Also, I wanted to demonstrate that consuption was higher during the few decades after the war, than before the war. Also, investment spending hasn't changed much over time. You'd expect accelerating capital expenditures over long periods of time if there was excess profit accruing to capital.

Its also there for information in case anyone is interested.

[August1991]

If we are going to discuss US economic performance, let's go all the way back.

The following data is from the St-Louis Fed (which gets its data from the BEA) and Economic History Services. It is US real GDP per person (2000 prices) from 1789 to 2003. Then, I have added the annualized growth rate of real GDP per person over the previous ten years.

(EHS has a note about data sources.)

1790 $1,219

1791 $1,207

1792 $1,247

1793 $1,263

1794 $1,291

1795 $1,368

1796 $1,430

1797 $1,357

1798 $1,365

1799 $1,432

1800 $1,426 1.6%

1801 $1,570 2.7%

1802 $1,398 1.1%

1803 $1,436 1.3%

1804 $1,460 1.2%

1805 $1,526 1.1%

1806 $1,454 0.2%

1807 $1,486 0.9%

1808 $1,360 0.0%

1809 $1,475 0.3%

1810 $1,506 0.5%

1811 $1,475 -0.6%

1812 $1,394 0.0%

1813 $1,476 0.3%

1814 $1,540 0.5%

1815 $1,529 0.0%

1816 $1,531 0.5%

1817 $1,555 0.5%

1818 $1,656 2.0%

1819 $1,592 0.8%

1820 $1,548 0.3%

1821 $1,520 0.3%

1822 $1,664 1.8%

1823 $1,572 0.6%

1824 $1,548 0.0%

1825 $1,708 1.1%

1826 $1,600 0.4%

1827 $1,628 0.5%

1828 $1,663 0.0%

1829 $1,671 0.5%

1830 $1,660 0.7%

1831 $1,683 1.0%

1832 $1,737 0.4%

1833 $1,821 1.5%

1834 $1,889 2.0%

1835 $1,797 0.5%

1836 $1,743 0.9%

1837 $1,845 1.3%

1838 $1,809 0.8%

1839 $1,921 1.4%

1840 $1,860 1.1%

1841 $1,857 1.0%

1842 $1,778 0.2%

1843 $1,908 0.5%

1844 $1,923 0.2%

1845 $1,936 0.7%

1846 $1,920 1.0%

1847 $2,047 1.0%

1848 $1,994 1.0%

1849 $1,947 0.1%

1850 $2,035 0.9%

1851 $2,116 1.3%

1852 $2,289 2.6%

1853 $2,453 2.5%

1854 $2,298 1.8%

1855 $2,421 2.3%

1856 $2,387 2.2%

1857 $2,338 1.3%

1858 $2,442 2.0%

1859 $2,451 2.3%

1860 $2,467 1.9%

1861 $2,365 1.1%

1862 $2,323 0.1%

1863 $2,278 -0.7%

1864 $2,707 1.7%

1865 $2,425 0.0%

1866 $2,409 0.1%

1867 $2,381 0.2%

1868 $2,427 -0.1%

1869 $2,454 0.0%

1870 $2,616 0.6%

1871 $2,670 1.2%

1872 $2,711 1.6%

1873 $2,781 2.0%

1874 $2,700 0.0%

1875 $2,776 1.4%

1876 $2,746 1.3%

1877 $2,768 1.5%

1878 $2,821 1.5%

1879 $3,099 2.4%

1880 $3,388 2.6%

1881 $3,425 2.5%

1882 $3,552 2.7%

1883 $3,553 2.5%

1884 $3,539 2.7%

1885 $3,484 2.3%

1886 $3,509 2.5%

1887 $3,588 2.6%

1888 $3,496 2.2%

1889 $3,642 1.6%

1890 $3,621 0.7%

1891 $3,664 0.7%

1892 $3,761 0.6%

1893 $3,685 0.4%

1894 $3,506 -0.1%

1895 $3,843 1.0%

1896 $3,686 0.5%

1897 $3,915 0.9%

1898 $3,937 1.2%

1899 $4,306 1.7%

1900 $4,309 1.8%

1901 $4,740 2.6%

1902 $4,722 2.3%

1903 $4,766 2.6%

1904 $4,853 3.3%

1905 $5,192 3.1%

1906 $5,300 3.7%

1907 $5,125 2.7%

1908 $4,754 1.9%

1909 $5,201 1.9%

1910 $5,115 1.7%

1911 $5,197 0.9%

1912 $5,411 1.4%

1913 $5,515 1.5%

1914 $4,998 0.3%

1915 $5,092 -0.2%

1916 $5,830 1.0%

1917 $5,745 1.1%

1918 $6,187 2.7%

1919 $5,918 1.3%

1920 $5,698 1.1%

1921 $5,396 0.4%

1922 $5,687 0.5%

1923 $6,369 1.5%

1924 $6,422 2.5%

1925 $6,463 2.4%

1926 $6,762 1.5%

1927 $6,709 1.6%

1928 $6,743 0.9%

1929 $7,105 1.8%

1930 $6,424 1.2%

1931 $5,965 1.0%

1932 $5,156 -1.0%

1933 $5,061 -2.3%

1934 $5,572 -1.4%

1935 $6,027 -0.7%

1936 $6,768 0.0%

1937 $7,072 0.5%

1938 $6,776 0.0%

1939 $7,264 0.2%

1940 $7,827 2.0%

1941 $9,079 4.3%

1942 $10,644 7.5%

1943 $12,220 9.2%

1944 $13,053 8.9%

1945 $12,766 7.8%

1946 $11,241 5.2%

1947 $10,924 4.4%

1948 $11,206 5.2%

1949 $10,957 4.2%

1950 $11,672 4.1%

1951 $12,251 3.0%

1952 $12,507 1.6%

1953 $12,861 0.5%

1954 $12,549 -0.4%

1955 $13,210 0.3%

1956 $13,225 1.6%

1957 $13,260 2.0%

1958 $12,917 1.4%

1959 $13,609 2.2%

1960 $13,506 1.5%

1961 $13,616 1.1%

1962 $14,240 1.3%

1963 $14,667 1.3%

1964 $15,335 2.0%

1965 $16,138 2.0%

1966 $17,012 2.5%

1967 $17,271 2.7%

1968 $17,919 3.3%

1969 $18,237 3.0%

1970 $18,055 2.9%

1971 $18,478 3.1%

1972 $19,278 3.1%

1973 $20,200 3.3%

1974 $19,897 2.6%

1975 $19,670 2.0%

1976 $20,503 1.9%

1977 $21,220 2.1%

1978 $22,146 2.1%

1979 $22,597 2.2%

1980 $22,330 2.1%

1981 $22,680 2.1%

1982 $22,046 1.4%

1983 $22,840 1.2%

1984 $24,260 2.0%

1985 $25,038 2.4%

1986 $25,672 2.3%

1987 $26,298 2.2%

1988 $27,116 2.0%

1989 $27,716 2.1%

1990 $27,869 2.2%

1991 $27,449 1.9%

1992 $28,011 2.4%

1993 $28,421 2.2%

1994 $29,220 1.9%

1995 $29,598 1.7%

1996 $30,328 1.7%

1997 $31,331 1.8%

1998 $32,269 1.8%

1999 $33,353 1.9%

2000 $34,224 2.1%

2001 $34,146 2.2%

2002 $34,348 2.1%

2003 $34,936 2.1%

The average, from 1800 to 2003, of the ten year annualized per capita real growth rate is 1.6%. That is phenomenal in historical terms.

Edited August 6, 2007 by August1991

[Toro]

Its also 1.6% compounded annually from 1790 to 2003. It was 1.1% from 1800 to 1900. It was 2.1% from 1900 to 2000. It was 2.2% from 1980 to 2000. It was 2.4% from 1950 to 1980. It was 2.1% from 1970 to 1980.

So much for globalization being bad for the economy. But on the other hand, the supply-siders didn't have much of an effect from trendline either.

[Toro]

Total US nominal wages paid

http://www.bea.doc.gov/bea/dn/nipaweb/IndexW.htm#W - Wages and salary disbursements, Table 2.1

in billions

1929 $50.5

1940 $49.9

1950 $147.2

1960 $272.9

1970 $551.6

1980 $1,377.7

1990 $2.754.0

2000 $4,892.4

2004 $5,389.4

Annual growth in total nominal wages by decade

1930s -0.9%

1940s 11.4%

1950s 6.8%

1960s 7.2%

1970s 9.3%

1980s 7.5%

1990s 5.6%

2000s 3.8%

Total 6.3%

Annual growth in total national income by decade. This includes rent, dividends, interest payments, and other returns to capital.

1930s -1.5%

1940s 11.0%

1950s 6.6%

1960s 7.1%

1970s 10.2%

1980s 8.3%

1990s 5.5%

2000s 4.5%

Total 6.4%

Real wage growth

(You'll have to adjust for inflation yourself. http://www.bea.doc.gov/bea/dn/nipaweb/IndexW.htm#W - Price indexes, Table 1.1.4)

1930s 1.2%

1940s 5.7%

1950s 4.3%

1960s 4.7%

1970s 2.5%

1980s 2.7%

1990s 3.3%

2000s 1.6%

Total 3.3%

Real total income growth

1930s 0.5%

1940s 5.3%

1950s 4.1%

1960s 4.6%

1970s 3.4%

1980s 3.4%

1990s 3.2%

2000s 2.2%

Total 3.4%

Real per capita wage growth.

(You'll have to adjust the per capita figures yourself http://www.bea.doc.gov/bea/dn/nipaweb/IndexW.htm#W - Population Growth, Table 7.1)

1930s 0.4%

1940s 4.3%

1950s 2.5%

1960s 3.3%

1970s 1.4%

1980s 1.7%

1990s 2.0%

2000s 0.6%

Total 2.1%

Real per capita total income growth.

1930s -0.2%

1940s 4.0%

1950s 2.3%

1960s 3.2%

1970s 2.3%

1980s 2.5%

1990s 1.9%

2000s 1.2%

Total 2.2%

Looked at another way, real per capita annualized wage growth

1935-1944 9.3%

1945-1954 -0.5%

1955-1964 1.9%

1965-1974 2.7%

1975-1984 1.1%

1985-1994 1.6%

1995-2004 2.1%

or

1945-1974 1.4%

1975-2004 1.6%

or

1980-2004 1.7%

Real per capita annualized income growth

1935-1944 8.1%

1945-1954 0.0%

1955-1964 2.1%

1965-1974 3.1%

1975-1984 2.3%

1985-1994 1.8%

1995-2004 2.1%

1945-1974 1.7%

1975-2004 2.1%

or

1980-2004 2.1%

Conclusion - this idea that wages have been falling the past few decades is false. In fact, they have accelerated since 1980.

[Guest eureka]

That still does not address the statement from the World Fact Book that "most" of the increases since 1975 have gone to the top 20% of income earners: or that in Canada, real incomes dropped from 1977 and regained the 1977 level in the late 90's.

As I wrote - and I think Yaro also, what gains there were ere achieved at the cost of longer working hours. I don't know where the refernce is, but I once saw that average hourly earnings are lower now. I also have posted family income as only 3.9% higher in Canada. That despite the great increase in multi income families in Canada.

I believe I also posted a site that showed GDP growth to be substantially lower from 1980-2000 than from 1960-1980. I think that all those facts give some cause to rethink the benefits of Globalization.

[catch-as-catch-can]

1969 $18,237

2003 $34,936

What's that? Take home pay?

[Toro]

Eureka

Hours worked is less than it was in the past. I will find the US government data and link it. The wage survey measures this.

[Toro]

I found some data on income inequality from the census bureau. Income has been rising for all income stratas, including the poorest of the poor. However, it has not been rising as fast as the richest.

In constant dollars, income by household. (1998 was the latest data available)

The poorest decile

1967 - $7,324

1998 - $9,700

Increase 32%

The richest 5%

1967 - $85,317

1998 - $132,199

Increase 55%

http://www.census.gov/hhes/income/incineq/...4/p6098tb3.html

Share of aggregate income

The poorest quintile

1967 - 4.0%

1998 - 3.6%

The richest 5%

1967 - 17.5%

1998 - 21.4%

http://www.census.gov/hhes/income/incineq/...4/p6098tb2.html

[theloniusfleabag]

Dear Toro,

Income has been rising for all income stratas, including the poorest of the poor. However, it has not been rising as fast as the richest.

In constant dollars, income by household. (1998 was the latest data available)

One factor I don't see here is what percentage of households went from one income to two (both parents working) in the same timeframe. I think that this number is vast, (mind you, I'm sure the divorce rate has gone up also) but it is hidden in the words 'household income'.

[Guest eureka]

"The share of wage and salary income coming from the government can be seen as a measure of the size of government relative to the economy. It began to rise in the 1950's and peaked in the second quarter of 1975, under Mr. Ford, at 21.8 percent of total wage and salary income. It declined under Jimmy Carter and Ronald Reagan, rose a little under the first President Bush and then fell rapidly under Bill Clinton, hitting a low of 16 percent in late 2000.

It has risen under the current administration. The latest quarterly figure showed 17.4 percent of all wage and salary payments came directly from the government.

Some of that is simple economic cycles. Government salary payments tend to rise less rapidly than private ones in good times and not to fall in bad times. But it also shows that this administration has not cut the size of government.

A bigger government and tax cuts are the main reasons that real personal incomes are up since 2000. The big question for the economy is whether the stimulus has been enough to produce a self-reinforcing recovery. More signs that the private economy has turned around will be needed before that can be deemed a sure thing."

You might be interested in this, Toro. I also found somewhere figures that Personal Income declined from 2000 for all groups.

I would like to see some evidence that hours of work declined in the last couple of decades. Everything I have read over the past several years says differently. That information is available from Canadian sources that comment on the plight of the poorer and the "working man." I imagine that some American sources (buried under the weight of Right Wing ideology) have also noted this.

A Xhart on one site showed a decrease in Personal Income from about 1992 to the present.

[Guest eureka]

I think you could find that information, or relevant figures, from the Dept. of Labour stats. I gave up looking since it was taking too much time.

However, one quickie was that average weekly hours went from 91.2 in 1995 to 101.5 in 2004. I have forgotten which year was 100.

[Toro]

One factor I don't see here is what percentage of households went from one income to two (both parents working) in the same timeframe. I think that this number is vast, (mind you, I'm sure the divorce rate has gone up also) but it is hidden in the words 'household income'.

<{POST_SNAPBACK}>

I'm not sure. I do know that the household formation has risen faster than population growth for at least the early part of that time period.

Also, if you scroll backwards, I posted real income per capita data, which has also been rising, and in fact accelerated in the 1990s. If the marginal contribution of labour and thus wages was falling, I think you'd probably expect real per capita wage growth to be falling as well.

[Toro]

You might be interested in this, Toro. I also found somewhere figures that Personal Income declined from 2000 for all groups.

I would like to see some evidence that hours of work declined in the last couple of decades.

<{POST_SNAPBACK}>

That may be eureka. 2000 was the top of the stock market bubble and the cusp of the recession. But what I think you have to look at are long-term trends. I think we give too much credit and blame to politicians. The resilience of the US economy is remarkable IMHO.

Hours worked have fallen. The government does a wage survey, which I believe is on the Bureau of Labor Statistics homepage. I've seen it and posted it before but can't remember where it is now. Anyways, the numbers are something like in 1970, the average work week was 40 hours while today its about 34. I'll find it and post it.

[Toro]

A bigger government and tax cuts are the main reasons that real personal incomes are up since 2000. The big question for the economy is whether the stimulus has been enough to produce a self-reinforcing recovery. More signs that the private economy has turned around will be needed before that can be deemed a sure thing."

I wouldn't necessarily disagree with this. Government spending is a counter-cyclical stabilizer in the economy. However, the real per capita wages I posted earlier are gross wages paid before taxes.

[Toro]

You might be interested in this, Toro. I also found somewhere figures that Personal Income declined from 2000 for all groups.

I would like to see some evidence that hours of work declined in the last couple of decades.

<{POST_SNAPBACK}>

That may be eureka. 2000 was the top of the stock market bubble and the cusp of the recession. But what I think you have to look at are long-term trends. I think we give too much credit and blame to politicians. The resilience of the US economy is remarkable IMHO.

Hours worked have fallen. The government does a wage survey, which I believe is on the Bureau of Labor Statistics homepage. I've seen it and posted it before but can't remember where it is now. Anyways, the numbers are something like in 1970, the average work week was 40 hours while today its about 34. I'll find it and post it.

<{POST_SNAPBACK}>

Here it is.

ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb2.txt

Average weekly hours worked, private sector

1964 - 38.5

1970 - 37.0

1980 - 35.2

1990 - 34.3

2000 - 34.3

2004 - 33.7