Well, we didn’t expect them to criticize Barry’s economic performance while he was running, did we?
I would give WaPo the benefit of doubt because the article is based on a CBO report that came out after the election, but that would imply WaPo was oblivious of our poor economic performance since Barry Zero got elected.
The WaPo article offers this CBO graphic……
In other words, this is the worst recession the US has had since the last communist was president, over 80 years ago. Here’s the meat and potatoes of the article….
Growth has been 9 percent below what was seen in past recoveries on average in its first three years. …..The U.S. economy just isn’t as good at growing as it used to be.
Potential GDP is the measure of what the economy is capable of producing if almost all of the people who want jobs are able to get one and almost all its machines and buildings were humming at their potential. While it has grown consistently through modern U.S. history (we can thank a growing population and steadily improving technology for that), it doesn’t always grow at the same rate. In periods when baby boomers were reaching their working years and women were entering the workforce in large numbers, the rate at which potential GDP rose was very high, over 4 percent at times, by the CBO’s reckoning.
I suppose I should explain a couple of things here. Yes, population growth rate is a factor in raw GDP growth. Technological advances are another factor. One part is easy to incorporate into what should be our economic performance, the other is a bit more difficult. But, we can use a couple of things to understand where we should be, if all things are equal. For the purposes today, I’ll use GDP as a euphemism for wealth growth. It isn’t necessarily so, but it will suffice, today.
If nothing changes, ie. population, technology, equipment performance, etc…. then economic performance would be a sine wave with a flat trend. I’ll use the WFT app to illustrate……..
Now, this is important, so pay attention. If one factors in population growth, in order to maintain the same amount of wealth per person, the GDP needs to increase at the rate of population growth. The sine wave, for populations that grow, must have at least the same linear incline, else, in real terms, the economy is stagnant or contracting. So, for the US, in order to simply maintain wealth compared to where we were, we must see a GDP growth at about 1% annually. No problem, right? We’re at 6%. But, the GDP growth is relative from where you were. Look at the start spot. This isn’t an appropriate way to look at it. Let’s see if we can find where we should be compared to where we were. Oh, here we are, from the same CBO report. (pdf)
Now, recall, simply to maintain wealth, we have to grow at 1%. The start point here, illustrated by the red line (I drew) is 4 years ago. What this means is that even only considering maintenance of wealth considering only population growth, the US is still in the recession because our incline is less than our population growth.
There are many other factors involved in what normal economic growth should look like. For most of the last half of last century, the US has outperformed the rest of the world economically. But, how as the world performed? What would an average economic performance look like on a graph?
As demonstrated, over and over again, a great proxy for economic growth is CO2 emissions. While global atmospheric CO2 levels have many, many factors, some which can’t be quantified, we can get a good approximation of what economic growth should look like in a modern society. Averaged annually, this is what economic growth should look like in order to only keep pace with the rest of the world.
We’re not even close.
As mentioned earlier, technology improvements is another factor in what our economic performance should look like. It’s much more difficult to quantify, but, again, we do have a proxy for this.
Moore’s law is the observation that over the history of computing hardware, the number of transistors on integrated circuits doubles approximately every two years. The period often quoted as “18 months” is due to Intel executive David House, who predicted that period for a doubling in chip performance (being a combination of the effect of more transistors and their being faster).
The law is named after Intel co-founder Gordon E. Moore, who described the trend in his 1965 paper. The paper noted that the number of components in integrated circuits had doubled every year from the invention of the integrated circuit in 1958 until 1965 and predicted that the trend would continue “for at least ten years”. His prediction has proven to be uncannily accurate
Today, more than ever, technological advancements are dependent upon the observation of Moore’s law.
Average economic growth should be = population growth rate + rate of technological advancement, averaged.
We are nowhere near where we should be. We are still behind in the simple terms of economic growth relative to population growth. We haven’t even come close to the growth we should see in terms of tech advancement. And that, my friends, is only to keep pace with the rest of the world.