PeakTrader.com

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PeakTrader said...

There's a high level of multicollinearity in private and public sector growth.

The U.S. economy is still on life support, because the federal government is overspending by $1 trillion a year.

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The economy has moved from the bottom of the ditch to a higher level. Yet, it's not out of the ditch.

Basically, the federal government burned trillions of dollars to mostly spin the economy's wheels.

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I wonder how much longer we can sustain $1 trillion a year budget deficits?

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It's better to calculate per capita real GDP growth, to control for population growth, over long-wave boom-bust cycles.

Period - Average Annual Per Capita Real GDP Growth

1946-73: 2.26% (Boom)
1973-82: 0.96% (Bust)
1982-07: 2.22% (Boom)

"This uniform growth rate is not obtained by averaging the year-to-year percentage changes in the observed value of the series.

The annualized growth rate is the average growth rate measured over a year. In other words, it is the hypothetical constant year-to-year growth rate necessary to take the beginning-year value of a series to its ending-year value."

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Large economies tend to grow more slowly than small economies.

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Morganovich, it should be noted, the U.S. had increasingly larger trade deficits after 1980, which subtract from GDP.

By the mid-2000s, trade deficits reached $800 billion a year or 6% of GDP. So, the 1982-07 period was a much greater era of prosperity than the 1946-73 period.

Also, the 1973-82 period was a bust phase in long-wave business cycles. There were three recessions (two severe and one moderate) with accelerating inflation.

In contrast, from 1982-07, there were two recessions (one moderate and one mild) with disinflation.

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Currently, we're in the fifth year of another long-wave bust phase.

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Morganovich, you can ignore the data, in the context of sound economic models, and make things up, which may seem intuitive and yet wrong.

Methinks, there are two effects.

When women work, e.g. in an economic boom, particularly at high-paying jobs, they have fewer children.

Also, in an economic bust, women have fewer children, because it's less affordable.

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The fertility rate or number of births, over a period, depends in part on demographics.

Long-wave business cycles exist based on economic data like bull and bear markets exist based on stock market data.

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It should be noted, when the Baby-Boomers began to enter "prime-age" (ages 35-54) in 1982, productivity began to accelerate not only from an increase in prime-age workers, but also from a decrease in less productive workers (the 25-34 age group is more productive than the 16-24 age group, but less productive than the 55-64 age group).

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