per capita production in US will soon stall ?

[Widdekind]

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:

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.)

 

[Moonglow]

time 4 another world war.

 

[itfitzme]

What are you using for "P" and "Q"? CPI and NGDP?

 

[expat_panama]

...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...

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--

--as when productivity stalls we can see overall economy contract sometimes and other times expand.

 

[Widdekind]

What are you using for "P" and "Q"? CPI and NGDP?

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)

 

[Widdekind]

what are we talking about, productivity (AKA out per hour)?

"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

 

[expat_panama]

per capita production in US will soon stall...

what are we talking about, productivity (AKA output per hour)?

"real GDP per capita" is...

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

 

[Widdekind]

"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:

 

[Widdekind]

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.

 

[itfitzme]

What are you using for "P" and "Q"? CPI and NGDP?

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)

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.

 

[itfitzme]

RGDP per capita would be a proxy for standard of living.

Better yet would be real dollar consumption per capita (the C in C + G + I + NX). It is a bit off because of the NX factor.

If we could assume that all the net imports are for consumption, we could go with C + Im and do real dollar per capita.

I haven't recognized any thing closer for standard of living.

I also don't care for it as it is far to aggregate, not accounting for income disparity. The thing is that the cost of products in the upper income bracket consumption items can be substantially overpriced. Sure, quality goes up but not by as much as price increases. Really, does increase in price for the 7% lean hamburger really measure that much more standard of living compared to the 20% lean? I am left with a sense of something being skewed up.

If we do RGDP per worker, we get efficiency.

 

[Widdekind]

What are you using for "P" and "Q"? CPI and NGDP?

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)

I hate to break this to you, but all you've got is an obvious mathematical relationship of;

P = k (1/P)

...

that's not true. This is the well-known "Penn effect", amongst western nations, those having higher price levels (P) grow more slowly (real GDP per capita, Q/N). All i'm showing, is that the effect is not only true for all similarly-developed nations, at one time; but one developed nation (US), over many times -- as prices rise, real growth (per capita) slows, even to a crawl.

 

[itfitzme]

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)

I hate to break this to you, but all you've got is an obvious mathematical relationship of;

P = k (1/P)

...

that's not true. This is the well-known "Penn effect", amongst western nations, those having higher price levels (P) grow more slowly (real GDP per capita, Q/N). All i'm showing, is that the effect is not only true for all similarly-developed nations, at one time; but one developed nation (US), over many times -- as prices rise, real growth (per capita) slows, even to a crawl.

I am not addressing the Penn effect. I have no argument with what you want to show.

What I am saying is that, given the data you have, and the way you have calculated things, you are plotting P vs f(1/P). Given the form of k/P, you are going to get an inverse relationship, regardless of whether the Penn effect is true or not. The entire thing then depends on what k = Y/N is doing. If k is constant, which it obviously isn't, you would bet a perfect inverse relationship. In this case, k isn't constant, so your getting something that isn't a perfect inverse.

I have the same issue with trying to get something out of the available data and have had to abandon some pursuits until I can find an independent measure.

It's just an algebra thing. You obviously know your algebra so I don't see how you can disagree.

Clearly, if we did a regression on Q/N = Y/P/N = Y/(PN) vs 1/P (have to do some manipulation to linearlize things) we would obviously get a relationship.

I'm open to some reason to explain why we can disregard the obvious P vs. f(1/P), though I don't see how we can. I am confident, 100% confident, that if you asked anyone with some ability at these things, they would say the same.

 

[Widdekind]

was i clear, that the x-axis is "growth in real GDP per capita" (or, "real net durable GDP per capita") ? That is, the graphs plot (P) vs. (% change in Q/N). If you scatter-plotted P vs. Q, you would find, that (P) increases with (Q=Y/P):

http://www.usmessageboard.com/economy/221506-ps-and-qs-for-us-economy-1960-today.html

 

[Widdekind]

In 1997, the UK & USA had perhaps the most "capital efficient" workers on earth (real GDP [Q] per worker [L]) -- they generated about $1 of real output per $1 of capital equipment, which was about 20% higher than other industrializing nations:

Capital per worker (K/L) vs. Quantity per worker (Q/L) [2000USD / #]
workers per capita (L/N)

reference:
Carbaugh. International Economics (13th ed.), p.71
World Bank internet data-base