Chapter 18 Long-Term Economic Growth
 See Quick Notes Economics Reviews for Test Help

Index
I. Analyzing Economic Growth  
II. Growth Determinants 
III. Growth Data


IV. Will U.S. Stay On Top?
V. The Job Outlook Based On Education 
VI. Is Slow Economic Growth a U.S Problem
VII. Thoughts from the Internet


VIII. Current Economic Wellbeing
1p
study
IX. History of U.S. Economic Growth 1p study
X. U.S. Economic Normality 1945-2015  p2 
XI. One-Page Economic Issues  
 Updated 4/9/17

The Coming War Between Trump & The Fed to Determine Growth  8 min video review/preview 4/14/17

Rise of Monopoly Power in the United States - Washington Center for Equitable Growth is a technical video tying recent micro and macro developments to financial markets.

I. Analyzing Economic Growth   
    
A. Measurement will be in nominal, real, and per capita.
     B. Real per capita Gross Domestic Product, Disposal
         Personal Income, Total Private Wages, Manufacturing
         Wages and spending on Social Security, Medicare,
         and Medicaid will be studied.   
     C. Rapid growth policies have costs to society 
         1. Pollution  
         2. Harried lifestyle 
         3. Neglected worker safety 
         4. Increased litigation
     D. View Bradford Delong's( USC Berkley) dynamic
          presentation of GDP growth per capita since 1900.
     E. Readings
         1. U S Could Use A New Economic Strategy 3/1/16
         2.
The Crisis, and the Possible Futures, of All Things Euro 12/ 6/1

Recently Economic Growth Slowed 

 

 

II. Determinants of Growth     
    
A. Quantity and quality of natural and human resources
     B. Quantity and quality of capital goods
     C. Development and application of technology
     D. Efficiency of economic system
          1. Maintaining reasonable, consistent growth in 
              Aggregate Demand (not having recessions or
              excessive inflation) 
          2. Efficient allocation and use of economic resources
          3. See Sustainable growth of the U.S and ICOR
    E.
Global Growth Hinges On Policy Shifts Political Clarity  
         Fed on GDP/person growth

Foreign Investment in U.S. Looks Good

Trends Artificial Intelligence Technology/nvention

The Richman FED Looks to the Future

"From 1947 through 2007, the economy grew at roughly 3.4 percent annually. While growth is often expressed in terms of total economic output, a growing population will bring with it some amount of overall growth. To measure improvement in average standards of living, growth of GDP per capita is the standard yardstick. The post-war average of 3.4 percent overall growth translated to an average growth rate per capita of about 2.1 percent. During that period, the United States experienced a few significant recessions and several milder downturns. Such fluctuations can be acutely felt by many people when they occur, but against the longer-run performance, they look relatively insignificant." Source  A New Normal :THE PROSPECTS FOR LONG-TERM GROWTH IN THE UNITED STATES

 

Is Demography the Destiny for U.S. -GDP Growth?

 

 

 
 

When Will Macro Policy Affect Income Equality and Growth?

 
   

III. Growth Data

         A. Business Cycle data since 1854
         B.
The Greatest Century That Ever Was: 25 Miraculous Trends of the Past 100 Years
        
C.
The First Measured Century: An Illustrated Guide to Trends in America, 1900-2000
        
D. Time Series Data

   
   

But Who Gets What Continues to be Discussed!

For a Very Long Time

U.S. Now Leads the World

Total GDP Helps With Big Projects

 

GDP/Capita Feeds People

Countries With Decreasing Populations Will Not Lead

 Source: IMF

   
   

Consistent Growth Does Not Mean Constant Growth

 

Slow Wage Growth

 

   

Retail Prices and the Time Cost of Household Appliances: 1959 vs. 1973 vs. 2013 source

Household Appliances Cost Per Hour Worked Down 85%  source 
 

11 Household
Appliances
Price
1959
Hours Worked
@$2.09
Price
1973
Hours Worked @$3.95 Price
2016
Hours Worked
@20.13
Washing Machine $210 101 $285 72 $480 24
Refrigerator $350 168 $370 94 $500 25
Coffee Maker $23 11 $37 9 $30 1.5
Vacuum Cleaner $95 46 $90 23 $140 7
Color TV $267 128 $400 101 $250 12
Totals $945 454 1182 299 $1,400 69.5
Percent Decrease     (454 -299)  ÷ 454 =  34% (299 - 69.5) ÷ 299 = 77%
Numbers Rounded    Editor's Note: Since 1957 the cost measured in hours worked has dropped 85%

,See Life of American Workers in 1915 from BLS  is quite deplorable and Trans Pacific Partnership Currency Manipulation Trade and Jobs shows a large loss of jobs with not attempt to quantify their value added (wage).

Editor's Note: In spite of this data the many people think average earners are worse off than 50 years ago. No one notices growth but it continues decade after decade.

U.S. Has Low Mobility and High Inequality
But Economic Wellbeing
Is High

businessweek.com/articles/2013-12-05/

 

 

 

 

IV. Will U.S. Stay On Top?

In the Early 1960's, They Were Predicting
 Russia Would Passing U.S.

USSR Growth History


In the 80's it was Japan

In the 1990's it was the European Union

 "Although customs duties disappeared in 1968, trade is not flowing freely across EU borders. The main obstacles are differences in national regulations. The Single European Act of 1986 launches a vast six-year program to sort these out. The Act also gives the European Parliament more say and strengthens EU powers in environmental protection".  

Note how Europe's high growth rate of the 1990's slowed. In the 2010's Europe slumped again and US growth rebounded in a similar fashion as it has in past balance sheet recession.

For a more in depth analysis see koos-balance sheet recession See 5 Reasons Germany Isn't  Suffering in the 21st Cntury

 

Bailout-of-worlds-oldest-bank-underscores-lingering-crisis-in-europe.html

Source

 

Some Think Slow Growth is a Problem

 

Not Consumers

 

Please     

 
 V. The Job Outlook Based On Education 
         
A. Growth from 2004-14 from Job outlook by education Olivia Crosby and R. Moncarz
         
1. http://www.bls.gov/careeroutlook/2006/fall/art03.pdf
          2. This interesting report has been discontinued after 2007. Why, probably because
              a careful study of the data provided revealed that education on any kind can not
              economically help a majority of our young people.
      
B. Summary of the BLS 2004-2114 Job outlook by education for college graduates   
           1. "Between 2004 and 2014, BLS projects 55 million job openings for workers who
                are entering an occupation for the first time. Of these, at least 13.9 million [25.3%]
                are expected to be filled by college-educated workers."
           2. The Department of Labor continues in its efforts to explain or not explain the over 
               supply of college graduates. Their latest attempt to divide college graduates into 
               two categories.  "In these 'pure college' occupations, at least 60 percent of current
               workers aged 25-44 have a bachelor’s or higher degree, fewer than 20 percent
               have a high school diploma or less education, and fewer than 20 percent have
               taken college courses but do not have a bachelor’s degree." BLS projects that 
               pure-college occupations will provide about 6.9 million..." [about 12.5% of openings].
           3. "Over the 2004-14 decade, about 15.6 million openings are projected to be in occupations
               in which the number of college educated workers is significant—20 percent or more but
               which also employ a significant number of workers with other levels of education." 
               Of this "Mixed education" occupations group, the  "...BLS expects 7 million to be filled by
               college graduates..."[about 12.5%of the total opening][ note 12.5 +12.5 = 25]
           4. The August 20&27 issue of Business Week states on page 45 that the BLS reports that
               34% of adult workers in the U.S. now have a college degree.  This means that about
               one-quarter of the college  graduates (34% -25%)/34% will be in occupations 
               where less than 20% of the workers have a college degree.

 
      C. Occupation Employment Projections to 2014  by Daniel E. Hecker visit
            
Abstract | Excerpt | Full text in PDF (205K) 
        D. 2008 to 2018 Job Outlook updates the data.

EXPECT CHANGE

 VI. Is Slow Economic Growth a Problem for the United States?
      A. Recent growth trends of western industrial countries (% change)
      B. In 1870 the U.S. standard of living was 15% below that of the 
           United Kingdom. Over the next 120 years a higher growth rate 
           of only 1/2 of one percent in the U.S. (1.86% to 1.34%) resulted
           in the U.S. having a standard of living 50% higher than that of 
           the United Kingdom.
      C. When this data was published in the early 1990's, people 
           reacted the following conflicting thoughts.
           1. Some believed people were not sacrificing for the future.
               a. Saving and investment were low
               b. Labor force was poorly prepared, especially the bottom
                   quarter.
               c. Research and development funds were small and poorly
                  applied.
           2. Others felt recent slow growth is a short-term complicated
               problem.
               a. A large number of baby boomers and women were new
                   to the labor force and would need time to develop 
                  appropriate skills.
              b. Benefits of "Green movement" (to improve world-wide
                  ecology) are difficult to measure and are excluded from
                  GDP.
              c. Little credit is being given to the economic system which
                  provided the wealth necessary to increase longevity.
              d. Service productivity, which is difficult to measure, is
                  substantially understated.
              e. There has been a substantial increase in residual 
                  construction and capital gains from stock investments
                  which do not count as savings.
              f. Military R & D helped win the cold war, and when 
                 transferred to the private sector, will increase growth.
      D. Beginning in 1995 the United States experienced a substantial
           increase in productivity while Japan and Europe experienced a
           drop in productivity. McConnell and Brue provide the productivity
           chart. Participation rate from the Big Picture Economics Blog.  
          1. By 2001 Alan Greenspan, chair of the Federal Reserve, worried
              that the high productivity and paying off the federal
              debt too fast could have unforeseen economic repercussions.
          2. Interesting, as indicted at the beginning of this chapter, 
              recent productivity increases didn't translate into increased
              economic growth
          3. By 2006, studies were indicating recent growth rates may
              have been overstated.
          4. The lost decade shows slow growth for a while. 
              Interesting comments. 08/20/10
          5. Economic Stagnation fro L. Summers 80 min video
          6. New Normal The Prospects For Long-Term Growth in The United States

     

"U.S. growth was revised upward by 0.5 percent and remains a bright spot, mirroring the findings in October’s World Economic Outlook. Among advanced economies, there is a widening gap between the U.S. economy—forecast to grow by 3.6 percent in 2015, bolstered by cheap oil prices and private domestic demand—and the economies of the euro area, revised down to 1.2 percent growth in 2015. In the euro area, only Spain’s economy was revised upward and is expected to grow by 0.3 percent.

Japan, meanwhile, is expected to manage only a meager 0.6 percent growth rate this year.

China’s sluggish growth in 2014, its slowest-paced in 24 years, is contributing to the faltering economies of some Asian countries. While it grew 7.4 percent in 2014, down from 7.8 percent in 2013, the IMF forecasts growth below 7 percent for the next two years.

Russia fared even worse, with a growth rate of -3.0 percent forecast for 2015, due to the ongoing conflict in Ukraine and plummeting oil prices." Source Newsweek

Immigrants help growth

The OECD Brain Gain Race has increased high-tech immigration by 70% to 35,000.000 since 2000. While the U.S population is 13% immigrants, they start 25% of the new business and make-up 30% of Silicon Valley employees. Twenty-five percent of the top 2013 tech companies were started by first or second generation Immigrants.

http://time.com/4362772/ruchir-sharma-rise-of-nations/

 

 

 

 

 

 

 

The Home Size/ Bathroom Index Indicates No

 

 

 

 

 

 


 

 

 

Current Data
Civilian Labor Force Participation Rate
(%)

Median Income Grew by 14% Then Dropped Back to Only 5.9%
Two Big Drops Over 40 Years Didn't Help

 

Politicians and Media Like This Quick But Low Growth Estimate. Since 1965 Fringe Benefits and Household Composition Have Affected Income growth. Measuring Middle Class Wellbeing Requires Adjustments for Appropriate Inflation Measure, Fringe Benefits and Household Type.     

 

 

Federal Reserve Middle Class Wellbeing Up 44% to 62%   Source

FED'S 44% TO 62% Increase Better Than 5.9% BUT
 Much is Health Care and Entitlements and
 Popular Media Polarizes Many See Economic Wellbeing

VII. Thoughts from the Internet
      A.
How the Government Dealt With Past Recessions from the New York Times  
      B
. Industrial Revolution and the Standard of Living 
           by Clark Nardinelli
      C.
The First Measured Century  
          Ben Wattenberg's classic is a must for those interested
          in the economic history of the 20th century.
      D.
Escape from Hunger and Premature Death, 1700-2100
         
by Robert William Fogel. Cambridge University Press, 2004.
      E.
annual report on income, poverty and health insurance  Census Bureau’s 2008 
      F.
50-Reasons We are Living Through the Greatest Period
     G. The Next Economic Disaster
video blames high private debt for slow growth
      H.
Cycles: Some empirical issues show that long term can be a long time.
     
I. Trade Ruler: is a digital game using trade to increase growth.
    
J. The World Is Flat and growth prospects are limited.
         
1.
Tradable Jobs 8/1/11 from http://www.economicpopulist.org/
       
       "... if the 27.3 million jobs added from this time period, 97.7% of them
              were non-tradable. What do the authors mean by tradable jobs
             Jobs that can be offshore outsourced." ...  "As an example, health
              care must be domestically sourced because sick people are here.
             Computer architecture, on the other hand, can be offshore outsourced
              and the results moved around the globe to a manufacturing center."
       
2. New jobs created are not in Tradable Goods that the world wants


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