Summary: Friday’s news about Q2 confirmed that America is mired in secular stagnation. Here is the worse news, unmentioned in the newspapers. It should electrify Campaign 2016, giving it real meaning — beyond the circus of personalities. That will happen only if you see what is happening and act. If each of us as individuals sees and acts.
Pictures tell the tale: Compare growth in real GDP since the 2007 peak
Total GDP up 10.6% . Per capita GDP up 3.4%. Over 9 years!
The news about Q2 real GDP was terrible: up only 1.2% SAAR (seasonally adjusted annual rate). The YoY change more clearly shows the trend (less noise): also up 1.2%, far below the slow 2.2% average of 2012-2015. Secular stagnation tighten its grip on America, as it has on Japan and Europe. There is no certain, easy or fast cure.
People often complain that GDP does not match the economics they see around them. That’s correct — it’s an abstraction. But also we do not live by national GDP. Per capita GDP is closer to what we care about: it has grown only 0.5% during the past 4 quarters. Since the rich (the top few percent) take most or all of that, most American’s are losing ground (real median household income is down 7% since 1999, last available data). High rates of immigration plus slow national growth is a toxic combination.
This — and the war — are the big issues facing American (but not the only serious ones, of course). They are seldom mentioned in Campaign 2016 — except for brief promises of miracles to come. Instead we get a circus, as seen in both Conventions. Personal attacks, heart-warming schmaltz, and balloons and music.
The campaigns are designed by experts using the same science that gives us commercials, films, and TV. No surprise that the campaign is as informative as the Transformers movies. Like the Transformers movies, we loved the Conventions.
This is the problem. Our leaders have realized that we are like dogs. Alpo and chew toy keeps us happy, while they run America and harvest the bounty produced by its people, natural resources, and modern technology. When we change, becoming involved in politics (as other than consumers choosing from the menu), they will change.
For More Information
- Why America’s growth is slowing, and a solution — Imagine bringing June Cleaver from her 1957 home to today’s equivalent; she’d be astonished at our lack of progress. Look at how we’ve underperformed futurist Herman Kahn’s 1967 expectations for the year 2000.
- Larry Summers gives us the bad news. Worse, the only solution is more of the same.
- Do we face secular stagnation or a new industrial revolution?
- The IMF warns us of economic stagnation & suggests fixes. We should listen.
- Ben Bernanke sees the great slowdown in technological progress.
- The Fed sees years of slowing growth. Prepare for years of political turmoil.
- Trump & Clinton ignore America’s too-slow economic growth. We can change that!
The latest and best book about this
The essential reading to understand this aspect of modern America — shaping our future while we sleep — is The Rise and Fall of American Growth: The U.S. Standard of Living since the Civil War. From the publisher…
“In the century after the Civil War, an economic revolution improved the American standard of living in ways previously unimaginable. Electric lighting, indoor plumbing, home appliances, motor vehicles, air travel, air conditioning, and television transformed households and workplaces. With medical advances, life expectancy between 1870 and 1970 grew from forty-five to seventy-two years. Weaving together a vivid narrative, historical anecdotes, and economic analysis, The Rise and Fall of American Growth provides an in-depth account of this momentous era. But has that era of unprecedented growth come to an end?
“Gordon challenges the view that economic growth can or will continue unabated, and he demonstrates that the life-altering scale of innovations between 1870 and 1970 can’t be repeated. He contends that the nation’s productivity growth, which has already slowed to a crawl, will be further held back by the vexing headwinds of rising inequality, stagnating education, an aging population, and the rising debt of college students and the federal government. Gordon warns that the younger generation may be the first in American history that fails to exceed their parents’ standard of living, and that rather than depend on the great advances of the past, we must find new solutions to overcome the challenges facing us.
“A critical voice in the debates over economic stagnation, The Rise and Fall of American Growth is at once a tribute to a century of radical change and a harbinger of tougher times to come.”