Read the Beforeitsnews.com story here. Advertise at Before It's News here.
Profile image
By Economics as Classical Mechanics (Reporter)
Contributor profile | More stories
Story Views
Now:
Last hour:
Last 24 hours:
Total:

Recession in the USA. Which measure is more accurate?

% of readers think this story is Fact. Add your two cents.


In my previous post, several measures of the long-term economic decline in the USA were presented. One of the important ways of comparison is related to the difference between the real GDP and real GDP per capita, GDPpc. Figure 1 shows the annualized Q/Q growth rate for these two measures of real economic growth. (In the previous post, the estimates of Q/Q one year before were presented.) There is a clear technical recession as marked by two consequent quarters of negative growth rates: 2022Q1 and 202Q2. Two polynomial trendlines illustrate the difference between total and per head GDP estimates. The former includes mechanical population growth of 2% in the 1970s and ~0.5% in the 2010s. This is an important difference in the understanding of economic growth. Imagine a country with a population growing by 5% per year and having a real (total GDP) economic growth of 3% per year. In such a country, the population is getting poorer and poorer with time as everyone gets 2% less income every year. This example shows that the real GDP growth rate is not the best indicator of real growth in population prosperity. For the USA, the population growth rate and thus the GDP-GDPpc difference is large enough to be estimated for the recession definition. It is worth noting that the population in developed European countries has been growing at a much slower pace since the 1960s and the difference between real GDP and GDPpc growth rates was much lower with a lower integral effect during the whole period since 1960.

Figure 2 presents the most recent period to illustrate the difference between the real GDP and the GDP per capita growth rate. The estimates during the COVID-19 period are too large to be presented and they are not related to real economic evolution. The 2022Q1 and 2022Q2 growth rate estimates for the real GDP are -0.0158 and -0.0058 1/y; for the GDPpc -0.0178 and -0.0081 1/y. The difference is small as the population growth rate was extremely low in the 2020s (see the previous post). Instructively, if the population growth would be at the level of the 1970s, there would be no recession in 2022 due to mechanical GDP growth with increasing population, but it would be a recession for all individuals in the USA as their share of real GDP would be decreasing.  

The USA was a country with extremely healthy population growth from the 1960s to the 1990s. The mechanical GDP growth was a big (say, 1% from 3%  or 1/3 in the 1980s) part of the total growth. Currently, this driving force is fading away and technical recessions may happen much more frequently as the real GDP and real GDP per capita practically coincide. For the capital part of the US economy, there is no difference between the sources of growth – mechanical population growth or technical progress with increasing productivity. For the labor part, this difference is crucial.  

Figure 1. The  Q/Q one year ago growth rate estimates for the real GDP and GDP per capita with corresponding polynomial trendlines. Notice the recession in 2022Q1 and 2022Q2.  
Figure 2. Same as in Figure 1 for the period since 2015.


Source: http://mechonomic.blogspot.com/2022/09/recession-in-usa-which-measure-is-more.html



Before It’s News® is a community of individuals who report on what’s going on around them, from all around the world.

Anyone can join.
Anyone can contribute.
Anyone can become informed about their world.

"United We Stand" Click Here To Create Your Personal Citizen Journalist Account Today, Be Sure To Invite Your Friends.

Please Help Support BeforeitsNews by trying our Natural Health Products below!


Order by Phone at 888-809-8385 or online at https://mitocopper.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomic.com M - F 9am to 5pm EST

Order by Phone at 866-388-7003 or online at https://www.herbanomics.com M - F 9am to 5pm EST


Humic & Fulvic Trace Minerals Complex - Nature's most important supplement! Vivid Dreams again!

HNEX HydroNano EXtracellular Water - Improve immune system health and reduce inflammation.

Ultimate Clinical Potency Curcumin - Natural pain relief, reduce inflammation and so much more.

MitoCopper - Bioavailable Copper destroys pathogens and gives you more energy. (See Blood Video)

Oxy Powder - Natural Colon Cleanser!  Cleans out toxic buildup with oxygen!

Nascent Iodine - Promotes detoxification, mental focus and thyroid health.

Smart Meter Cover -  Reduces Smart Meter radiation by 96%! (See Video).

Report abuse

    Comments

    Your Comments
    Question   Razz  Sad   Evil  Exclaim  Smile  Redface  Biggrin  Surprised  Eek   Confused   Cool  LOL   Mad   Twisted  Rolleyes   Wink  Idea  Arrow  Neutral  Cry   Mr. Green

    MOST RECENT
    Load more ...

    SignUp

    Login

    Newsletter

    Email this story
    Email this story

    If you really want to ban this commenter, please write down the reason:

    If you really want to disable all recommended stories, click on OK button. After that, you will be redirect to your options page.