Category: Digital Media, Economy, Think Tank

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “BEA: Myths and Misperceptions About The U.S. Economy”

  1. spooz says:

    The chart showing labor’s share of national income to be relatively constant despite falling real wages hides the fact that higher paid employees have seen their incomes rise at the expense of lower paid ones, adding to the growing inequality in the US.

    Also, looking at capital’s share of corporate profits instead of national income shows how much larger capital’s share has grown relative to labor’s share.

  2. Willy2 says:

    Interesting, thought provoking piece. But it contains – at least – one misconception.

    One misconception is that GDP is equal to wealth. GDP – more or less – equals expenses. But from expenses one gets poorer, NOT richer. Ans where did that money US citizens spend comes from ? Borrowing (more) money ?
    From 2000 up to 2008 median household income remained – on average – flat while art the same time oil prices went up from $ 20 to over $ 140 and the CRB index went up some .In order to pay for all their expenses US citizens doubled their e.g. mortgage debt (from 5 trillion to $ 10 trillion).

    Federal taxes are at a low, yes. But this doesn’t include all the state and local tax rises (including all the hidden federal, state and local surcharges).

    • A couple responses to you, Willy…

      First, GDP can be calculated by the expenditure approach (as you intimate) or the income approach. Either way, they’re supposed to equate with one another, because one person’s expense is another’s income.

      GDP is a useful indicator of economic virulence for a number of reasons. One, you can derive a per capital income datapoint from it. Two, it gives us an idea of the taxing potential of a government, since theoretically a 100% government tax (whether VAT or income) for a static period would equal 100% of GDP.

      Your citing energy costs as synecdoche for inflation is either disingenuous or an anchoring bias. While CPI-U may be skewed toward the interest of the federal government (COLA, etc), energy is a small corner of the consumer expenditure basket (4.05%).

      By any inflation measure–whether CPI or the market-based alternative 5y5y forward breakeven–inflation is tame. Finally, by any definition, US wealth is not contracting, particularly for citizens, as you imply. In fact:

      ‘Total US debt/GDP has fallen under 350% (down from 380% high in 2009 & up from 250% in 2000), and assets/GDP up to 1300%, **leaving net worth/GDP at 550% (average since 2000)**.
      Public debt is up from 57% of GDP in 2009 to 95% (40% low in 2001 & 70% high in 1994); financial down from 125% in 2009 to 85%; **household from 100% in 2009 to 80%.**’

      Now, I would agree with you that debt accumulation is not a sound, long term modus operandi for an economy. But, let’s not point to consequences that don’t exist yet.

      • spooz says:

        By conventional methods inflation may be tame, but if you are unlucky enough to be putting a child through college, for instance, you will be paying a lot more than the 3% of household expenditures weighting it gets in the CPI. Health care and housing are also not fairly reflected in CPI. Maybe if housing appreciation had been included as a component, the federal reserve would have recognized the bubble that led to the GFC. And if you are unlucky enough to be elderly, your cost increase in health care accurately reflected in the index either.

        And along with the growth in wealth is growing inequality, not a desirable state for a sustainable economy.

        The devil is in the details, and how you choose to measure.

      • Willy2 says:

        Precisely, you’re trying to confirm what you’re trying to deny. GDP is either income or expenditure !!!! NOT wealth.

  3. Old Rob says:

    If all this is true, then we really do not have an unemployment problem; we’re just not consuming American made products. Go figure.

  4. Francois says:

    Judging the US solely by these charts, everything looks almost hunky-dory.

    Reminds me of a patient we got in the ICU; pulse at 68, blood pressure 126/78, EKG totally normal, all electrolytes within normal limits.

    Looks great, no?

    Admitted for brain trauma, she died 12 hours later.

  5. Real GDP has been an artificial metric since March 2007 … held aloft by those five trillion dollar deficits. Take their influence away and Structural GDP is only -4.7% today (and has avg’d -8.5% over the last six years. Most Americans are unaware this massive fiscal policy stimulus has averted a Greater Depression.

    SGDP outlook charts: