Here I go again- telling you stuff I think you need to know but that’s kind of unpleasant to hear. I’d love to help you ignore it (come to think of it, I’d love to ignore it too), but it’s just not in my DNA.
As you know, every quarter the markets and the press and some of us wait eagerly (or maybe not so eagerly) for the Gross Domestic Product number to be announced. Then they get analyzed, discussed, manipulated, and dissected. Then we’re done until next quarter. GDP, by the way, gets revised months and even years after we hear the first number (dare I call it preliminary?) but we never hear about those revisions.
Anyway, since maybe the end of 2007 we’ve watched the announced GDP growth with more than usual interest. That growth hasn’t been as fast as we would all like, but at least it was at a nearly tolerable, if not historically attractive, rate.
One of the things we all recognize but don’t think about is that the population of the United States is growing. Not as fast as it used to, but it is growing. So our GDP, however much it is, has to be split among more people.
The chart below shows real GDP growth juxtaposed with per capital real GDP growth, which takes population growth into account. “Real” means they are adjusted for inflation.
What you’ll see is that since the 2007 peak, total real GDP is up 10.6%. Real per capita GDP is up a total of 3.4%. That’s over 9 years and it isn’t much.
What should you take away from this? Perhaps you should be cautious about your sources of information and dig a little deeper. As I’ve said before, the mainstream media isn’t, in my opinion, a reliable source of the kind of data that will make you think. Second, if you’re confused about why, in spite of some modest GDP growth, the economy seems so soft, you might consider the difference between overall real GDP and real GDP per capita. And you’ll notice in the chart how real per capita GDP growth has kind of flattened out.
Here’s a link to the article and web site where I found this data. This author and his site drives me nuts from time to time but damn, he makes me think.