Dr. Yandle's Quarterly Economic Update: March 2012
46
Getting off the Ground The Incredible Boom Why Not Here? The Nation Regions Outlook Bruce Yandle [email protected] Mercatus Capitol Hill Campus March 15, 2012
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Transcript of Dr. Yandle's Quarterly Economic Update: March 2012
Getting off the Ground The Incredible Boom Why Not Here? The Nation Regions Outlook
Bruce [email protected]
Mercatus Capitol Hill CampusMarch 15, 2012
The Coming Global Boom
• In 2011, world GDP stood at $71 trillion dollars. • If over the next 30 years, real GDP grows at an
average rate of 2.5%, the long historic average, then the 2042 level of real GDP will double to $142 trillion dollars.
• There will be as much total GDP generated in those 30 years as has been generated cumulatively over history.
• That’s a lot of stuff!
Will Population Growth Eliminate the Gain?
No!
• In 2011, the world population stood at 7 billion. Per capita GDP was $10,100, in 2011 dollars.
• The world 2040 population is estimated to reach 9.0 billion.
• If GDP grows at 2.5% annually, then per capita GDP will stand at $15,777. $15,777 is lot a more than $10,100.
Will the U.S. Connect to the Global Engine?
Qat
ar
Sin
gapo
re
Par
agua
y
Rep
ublic
of C
hina
(Tai
wan)
Indi
a
Peo
ple's
Rep
ublic
of C
hina
Tur
kmen
istan
Arg
entin
a
Sri
Lank
a
Con
go, R
epub
lic o
f
Zim
babw
e P
eru
Bot
swan
a
Uzb
ekist
an
Uru
guay
Nig
eria
Afg
hani
stan
Tur
key
Yem
en
Eth
iopi
a
Mal
dive
s
Tha
iland
Dom
inica
n Rep
ublic
Lao
s
Zam
bia
0
2
4
6
8
10
12
14
16
18
Top 25 Countries, 2010 GDP GrowthAn
nual
Gro
wth
Rat
e
International Monetary Fund
Qat
ar
Sin
gapo
re
Par
agua
y
Rep
ublic
of C
hina
(Tai
wan)
Indi
a
Peo
ple's
Rep
ublic
of C
hina
Tur
kmen
istan
Arg
entin
a
Sri
Lank
a
Con
go, R
epub
lic o
f
Zim
babw
e P
eru
Bot
swan
a
Uzb
ekist
an
Uru
guay
Nig
eria
Afg
hani
stan
Tur
key
Yem
en
Eth
iopi
a
Mal
dive
s
Tha
iland
Dom
inica
n Rep
ublic
Lao
s
Zam
bia
0
2
4
6
8
10
12
14
16
18
Top 25 Countries, 2010 GDP GrowthAn
nual
Gro
wth
Rat
e
International Monetary Fund
North Korea vs. South Korea
2009 Per Capita Income
= $1,800
2009 Per Capita Income
= $30,000
Wait a minute!
What about the good ole
USA?
Unite
d Sta
tes
Brazil
Bangl
ades
h
Russia
Mex
ico
Vietn
am
Germ
any
Turke
y
Congo
(Kin
shas
a)
Franc
eIta
ly
South
Afri
ca
Spain
Colom
bia
Tanza
nia
Kenya
Alger
ia
Ugand
aPer
u0
50,000,000
100,000,000
150,000,000
200,000,000
250,000,000
300,000,000
350,000,000
2010 Population, Top 40 Countries, China & India Omitted
We are third most populous. Lots of people!
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
0
10,000
20,000
30,000
40,000
50,000
60,000
Mean Household Income Earned by Top 60%, 1967 - 2010(Constant 2010 Dollars)
$49,309 for 2010
AND (still) able to pay our bills.
We are young!
Unite
d Sta
tes
China
Japa
n
Germ
any
Franc
e
Unite
d Kin
gdom
Brazil
Italy
Indi
a
Canad
a
Russia
n Fed
erat
ion
Spain
Mex
ico
Korea
, Rep
.
Austra
lia
Nethe
rland
s
Turke
y
Indo
nesia
Switzer
land
Polan
d
Belgi
um
Sweden
Saudi
Ara
bia
Norway
Venez
uela
0
2,000,000
4,000,000
6,000,000
8,000,000
10,000,000
12,000,000
14,000,000
16,000,000
Top 25 Countries based on 2010 GDPM
illio
ns
of P
PP
Do
llars
World Bank
HUGE ECONOMIC ENGINE
Producer of World Reserve Currency
We print money, and the world takes it!
Alas, there are some problems.
1960
-01-
01
1962
-01-
01
1964
-01-
01
1966
-01-
01
1968
-01-
01
1970
-01-
01
1972
-01-
01
1974
-01-
01
1976
-01-
01
1978
-01-
01
1980
-01-
01
1982
-01-
01
1984
-01-
01
1986
-01-
01
1988
-01-
01
1990
-01-
01
1992
-01-
01
1994
-01-
01
1996
-01-
01
1998
-01-
01
2000
-01-
01
2002
-01-
01
2004
-01-
01
2006
-01-
01
2008
-01-
01
2010
-01-
01
-$1,600,000
-$1,400,000
-$1,200,000
-$1,000,000
-$800,000
-$600,000
-$400,000
-$200,000
$0
$200,000
$400,000
Federal Deficit, 1960-2011Millions
1970
1972
1974
1976
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
2011
2013
est
imat
e
2015
est
imat
e
2017
est
imat
e
-12.0
-10.0
-8.0
-6.0
-4.0
-2.0
0.0
2.0
4.0
Total Federal Deficit as Percent of GDP,1970-2017 est.
Since 1970, four years with a surplus.
22
1970-011973-011976-011979-011982-011985-011988-011991-011994-011997-012000-012003-012006-012009-01
-5
0
5
10
15
20
25 U.S. Misery Index, 1970-2011
Unemployment Rate Inflation Rate
1990M1 1991M5 1992M9 1994M1 1995M5 1996M9 1998M1 1999M5 2000M9 2002M1 2003M5 2004M9 2006M1 2007M5 2008M9 2010M1 2011M50
500
1000
1500
2000
2500
U.S. Housing Starts, 1/1990 - 1/2012(Thousands, SA)
U.S. Nonagricultural Employment, 1/2001 – 1/2012
Down 6.29 million from January 2008 peak.
Construction Employment, 2002 - 2012
Down 2.4 million from April 2006 peak.
2015
U.S. Nonagricultural Employment, 1/2001 – 11/2011
Down 6.29 million from January 2008 peak. 2014 2013
Unemployment Rates, 2/2012, 25 and older.
12.9% Less than H.S.
8.3% High School Diploma
7.3% Associate Degree
4.2% Bachelors and higher.
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 20110
2
4
6
8
10
12
14
16
18
Unemployment Rate & Educational AttainmentJune, 2001 - 2011
Less than H.S. Diploma Bachelor Degree or Higher
Un
em
plo
yme
nt R
ate
How are we doing in manufacturing?
Okay, if I could just find qualified workers!
1500 2000 2500 3000 3500 4000 4500 5000 55000
2000
4000
6000
8000
10000
12000
14000
16000
18000Job Openings versus Unemployed, 1/2000 - 12/2011
(thousands, s.a.)
Job Openings
Une
mpl
oyed
TOP 10 Manufacturing Economies: 1980 - 2010
Billions
2000
-01-
01
2000
-06-
01
2000
-11-
01
2001
-04-
01
2001
-09-
01
2002
-02-
01
2002
-07-
01
2002
-12-
01
2003
-05-
01
2003
-10-
01
2004
-03-
01
2004
-08-
01
2005
-01-
01
2005
-06-
01
2005
-11-
01
2006
-04-
01
2006
-09-
01
2007
-02-
01
2007
-07-
01
2007
-12-
01
2008
-05-
01
2008
-10-
01
2009
-03-
01
2009
-08-
01
2010
-01-
01
2010
-06-
01
2010
-11-
01
2011
-04-
01
2011
-09-
0160
65
70
75
80
85
90
95
100
105
U.S. Industrial Production, 1/2000 - 12/2011
2013
4500
6500
8500
10500
12500
14500
16500
18500
2050019
39
1941
1943
1945
1947
1949
1951
1953
1955
1957
1959
1961
1963
1965
1967
1969
1971
1973
1975
1977
1979
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003
2005
2007
2009
U.S. Employment in Manufacturing1939 - 2011
(thousands) Employment peaked in 1978. Disintegration took off after that.
Reduction accelerates in recessions.
0
20
40
60
80
100
12020
00M
1
2000
M5
2000
M9
2001
M1
2001
M5
2001
M9
2002
M1
2002
M5
2002
M9
2003
M1
2003
M5
2003
M9
2004
M1
2004
M5
2004
M9
2005
M1
2005
M5
2005
M9
2006
M1
2006
M5
2006
M9
2007
M1
2007
M5
2007
M9
2008
M1
2008
M5
2008
M9
2009
M1
2009
M5
2009
M9
2010
M1
2010
M5
2010
M9
2011
M1
2011
M5
2011
M9
Auto and Light Vehicle Production2000 - 2011
200000
250000
300000
350000
400000
45000020
00M
1
2000
M6
2000
M11
2001
M4
2001
M9
2002
M2
2002
M7
2002
M12
2003
M5
2003
M10
2004
M3
2004
M8
2005
M1
2005
M6
2005
M11
2006
M4
2006
M9
2007
M2
2007
M7
2007
M12
2008
M5
2008
M10
2009
M3
2009
M8
2010
M1
2010
M6
2010
M11
2011
M4
2011
M9
Mill
ion
s,
SA
U.S. Retail Sales & Food Service
TWO KEY U.S. INDICATORS…
A Year Ago!
42
The Two ISM IndicatorsNow!
How about the 50 states, sweetheart?
It’s a mixed bag!
????
State Per Capita Real GDP Growth: 2007 - 2010
20
07
Q1
20
07
Q2
20
07
Q3
20
07
Q4
20
08
Q1
20
08
Q2
20
08
Q3
20
08
Q4
20
09
Q1
20
09
Q2
20
09
Q3
20
09
Q4
20
10
Q1
20
10
Q2
20
10
Q3
20
10
Q4
20
11
Q1
20
11
Q2
20
11
Q3
20
11
Q4
20
12
Q1
20
12
Q2
20
12
Q3
20
12
Q4
-10
-8
-6
-4
-2
0
2
4
Real GDP Growth: 1Q2007 - 4Q2012Real Annual Growth Growth Rate
2011: 1.70%2012: 2.30%2013: 3.00%
2011-12 Outlook• GDP growth will range from 2.2% to 2.5% across 2012.• The U.S. unemployment rate will stay in 8.2% to 8.9% range. • Inflation will rise to 2.0%-3.0%, compared to 2011’s 2.5%.• Interest rates will rise, with a 100 basis point increase at the long end of the
yield curve by the end of 2012.
There are six hazards or ghosts from the past that may disturb the outlook.
• Fear-driven increases in personal savings, which means rebuilding consumer
net worth but further reductions in retail sales.• Rising energy prices.• A potential for massive inflation or credit market manipulation by the Fed to
avoid it.• Government entanglement in the economy that regulates and otherwise limits
economic freedom.• A huge deficit that must be dealt with. Taxes? Cut spending? Print money?• Gradual loss of reserve currency status• Election year craziness.
