PeakTrader.com

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PeakTrader said...

And yet, U.S. households bought a million fewer houses, four million fewer autos, and millions of fewer other goods in 2011 compared to before the recession.

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It looks like a crowding-out effect.

The federal government spent $1 trillion more in 2011 than 2007, while state and local governments raised taxes, fees, fines, fares, tolls, tuition, etc., and yet household consumption, along with state and local government consumption, shrunk.

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The federal government is $1 trillion a year larger (since it spent $1 trillion more in 2011 than 2007) and the private sector is $1 trillion a year smaller (since the output gap worsened from zero in 2007 to $1 trillion in 2011), and real GDP growth has been zero the past four years.

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Actually, roughly 100% of the increase in nominal GDP since 2007 went to federal government spending:

Nominal GDP

Q4 2011 $15.3 trillion
Q4 2007 $14.3 trillion

Real GDP

Q4 2011 $13.4 trillion
Q4 2007 $13.3 trillion

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Tracking GDP and Jobs
February 3, 2012

"We just aren’t recovering. The figure below plots the ratio of actual GDP to potential GDP...for the past year or more we have made essentially no progress on this front.

GDP growth can come in positive forever without actually moving the economy any closer to full recovery.

Each month/quarter/year that we do not close the gap...we’re simply leaving hundreds of billions of dollars on the table (cumulatively around $3 trillion and counting since the start of the recession)."

Chart:

http://www.epi.org/blog/gdp-reports-unemployment-numbers-economy-growth/

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Morganovich, the data I've seen, which include real compensation, net wealth, trade deficits, etc. imply U.S. living standards improved substantially from 1982-07, at least for most Americans.

However, over the past four years, living standards have generally been stagnant at best, and will decline sharply soon, if we remain on the present course.

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Morganovich says: "per capita income has been stalled for 10-15 years."

I see a huge increase in real per capita income from 1995 to 2007, and that doesn't even include the huge gains in net wealth and international trade.

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Here's Dr Perry's chart on real per capita GDP growth:

http://static.seekingalpha.com/uploads/2010/9/10/saupload_gdp.jpg

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http://www.blogger.com/comment.g?blogID=28997633&postID=6423464254216356840

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PeakTrader said...

Larry, unless you live in a communist country, people are slaves only for the basic necessities, i.e. shelter, food, and clothing, except when government "captures" you, one way or another.

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