A Partisan Nonpartisan Blog: Cutting Through Confusion Since 2012
Overall per capita GDP growth does not tell the whole story. The incomes of those in the top income categories and those in lower income categories have evolved in very different ways. Jordan Weissman lays out a graph that is very good at summarizing what has happened to the real incomes of different groups since 1950.
Although recessions in the United States are officially determined by a committee of the independent and nonpartisan National Bureau of Economic Research (NBER)–usually long after the fact–a rough-and-ready definition of a recession is the period of time when real GDP (the actual amount of goods and services produced) is falling, if it falls for a period of at least six months. This period of time when real GDP is falling is very different from the period when real GDP is “in the hole” compared to its peak, let alone the period when real GDP per person is in the hole.
For the same level of GDP,
GDP/Population goes down when Population goes up,
and Population in the United States is growing.
Americans are used to real GDP not only growing, but keeping up with the growth of population, plus a couple of percent more each year. This link shows a graph of real GDP per capita since the beginning of the Great Recession. Since at least the beginning of 2008, real GDP has been doing quite a bit worse than Americans are used to.
Catherine Mulbrandon has made a great set of graphs on her Visualizing Economics website.
Here is a graph showing the history of the logarithm of real per capita GDP in the U.S. since 1871. With the logarithm on the vertical axis, the slope of the curve shows the percentage growth rate.
Here is a graph showing the history of real per capita GDP in the U.S. since 1871. You can see what the miracle of compound growth does.
The two graphs are the centerpiece of Matt’s post.
Ambrose Evans-Pritchard offers more interesting graphs about gold in his post “The Monetary Maginot of the Gold Standard.” Also, Robert Samuelson uses history to argue against the gold standard in “New gold standard not practical.”
This link gives a taste of the kind of thing you can read in a book I highly recommend: The Talent Code: Greatness Isn’t Born, It’s Grown by Daniel Coyle. In order to learn a lot, you need to
To study effectively, you need to do a lot more than “going over things” several times. You need to identify what you don’t completely understand and zero in on it to figure it out. You need to wonder how each idea relates to everything else you have learned. You need to get to the point where you can write your own exam questions and answer them, carefully thinking through what it would make sense for the instructors to test.
The human mind has a natural tendency to skitter away from things that are hard to understand. Effective study requires you to resist that tendency like a bad addiction. You need to turn toward the ideas that are hardest, not away from them.