per capita production in US will soon stall ?

Discussion in 'Economy' started by Widdekind, Jun 17, 2012.

  1. Widdekind
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    Widdekind Member

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    On average, in the US, over the past 60 years, prices (P) have risen half-a-dozen times; and the growth (%) of real output per capita (Q/N) has fallen a dozen times. During recessions, outputs do temporarily fall below trend, for a few years. But overall, every decade, the price-level has increased by +20 points; and the growth of output per capita has decreased by -1%. At that rate, per capita output will "stall out", and begin to decline, within about 5 years, i.e. by about the 2016 presidential election:
    [​IMG]
    High prices, and slow growth, resembles poor African countries, suffering from lawlessness, wars, AIDS, and low savings rates. (For example, US consumers save very little, and spend allot, even "over-spending" on credit, so that more dollars are chasing the products they buy, so bidding up prices.)
     
  2. Moonglow
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    Moonglow Diamond Member

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    time 4 another world war.
     
  3. itfitzme
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    What are you using for "P" and "Q"? CPI and NGDP?
     
  4. expat_panama
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    expat_panama Silver Member

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    This doesn't check out.

    First, what are we talking about, productivity (AKA out per hour)? If we are then past performance has shown it to be a poor predictor of future trends--
    [​IMG]
    --as when productivity stalls we can see overall economy contract sometimes and other times expand.
     
  5. Widdekind
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    i chose the GDP-Deflator for the Price-level index (P); real output per capita is nominal GDP (Y) divided by the price-level (P), divided again by the population size (N):

    Y = PQ
    P = GDP Deflator
    Q = Y/P
    Q/N = Y/P/N = Y/(PN)
     
  6. Widdekind
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    Widdekind Member

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    "real GDP per capita" is nominal GDP in current dollars; divided by the price-level (P) adjusting for inflation (CPI, GDP-Deflator); divided by the US population (N)

    Q/N = Y/P/N
     
  7. expat_panama
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    expat_panama Silver Member

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    Why the switch to percapita real gdp --are you correcting mistakes in your first post or are you changing the subject?
     
  8. Widdekind
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    Widdekind Member

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    "real GDP per capita" is a well-known statistic (?), and is what i used throughout.

    Moreover, in addition to my OP, at present, about 30% of US GDP is either eaten (food, "non-durable consumption"), or depreciated (wear & tear, "consumption of fixed capital"). If you consider "real net GDP per capita":
    ( GDP - food - depreciation ) / P / population​
    then the US has already "stalled out", with negligible annual growth in real net GDP per capita:
    [​IMG]
     
  9. Widdekind
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    Widdekind Member

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    According to the FBI, property crimes & robbery cost tens of billions of dollars per year. And total law enforcement spending costs hundreds of billions of dollars per year. All of that could reduce "net GDP (per capita)" by a few more percent.
     
  10. itfitzme
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    I hate to break this to you, but all you've got is an obvious mathematical relationship of;

    P = k (1/P)

    I'm not sure it means that much except that k = (Y/N) is variable, thus the scattering affect.

    Other then that, P = Q/N = k (1/P) = (Y/N) (1/P) will be inversely proportional and thus you will get that negative slope.

    If anything, you should do P vs (Y/N). That will eliminate the obvious inverse factor cuz that inverse factor is giving you exactly what your seeing.
     

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