US Economy and Growth

America’s economy has enjoyed a steady solid growth rate for over 10 years.  The question is, where, how and what does the next decade look like?

According to a recent Bloomberg article, most of the wealth that the nation has generated has been from just 1% of counties. A recent report from the Bureau of Economic Analysis  found that a staggering 32.3% of US GDP was generated by 31 US counties.  What is perhaps even more odd about this statistic is that last year those 31 counties had only 26.1% of employed Americans.  

So it seems that the bones of the US economy is becoming further concentrated in larger cities and by the coasts.  Rural counties are dying down which could have implications for labor mobility and infrastructure spending.

But who exactly are these people who are bolstering the economy today?  According to a recent article in Yahoo Finance it is the immigrants who are making this happen: 

“Over the last decade, 42% of the net growth in U.S. population, and 54% of the net growth in the workforce, can be attributed to immigration. During the same period, the birth rate of native-born Americans has decreased, and the death rate has increased, due to aging. Immigrants now comprise roughly 15% of the total U.S. population. And because they tend to be younger than native-born Americans, immigrants now comprise about 17% of the U.S. workforce.”

With unemployment back at to its lowest since 1969 and a 3.1 percent increase in average hourly wages from 2018,  wherever its coming from and whoever’s providing it, the employment situation in America is positive.

Measuring US Economic Success

The Bureau of Economic Analysis on July 27th released the gross domestic product (GDP) growth rate for the second quarter of 2018: 4.1 percent.  Everyone has been very excited about this.  It is, after all, a greatly impressive figure, indicative of tremendous growth as compared to  the past few years.  However, according to a recent article by Sophie Mitra, not only does it not tell the whole story, the part of the story that it does tell could be problematic for the average family.  We have to first realize that:

“GDP has many limitations. It captures only a very narrow slice of economic activity: goods and services. It pays no attention to what is produced, how it is produced, or how it might improve lives.”

She pointed out that at the end of the day, what the average American is bringing home in their pay packet each month has remained stagnant “for decades,” irrespective of the fluctuation of GDP and/or unemployment.

Many economists actually believe that “economics considers wealth or the production of goods and services as means to improve the human condition,” and rather it is simply the media that is obsessed with GDP figures.

However, President Trump’s top economic advisor, Larry Kullow insists that the GDP noise “is a boom that will be sustainable,” with Trump himself boasting that “his administration has achieved an ‘economic turnaround of historic proportions’.”

Even if we do consider GDP the be-all and end-all measuring stick of economic success and prosperity, was this all Trump’s doing?  According to a Bloomberg article by Sho Chandra, probably not, since:

“The stars were aligned following 2 percent growth in the first quarter: The biggest tax overhaul since the Reagan era delivered another boost to consumer spending and business investment, and the volatile categories of inventories and trade probably juiced the number — helped by a likely temporary jump in soybean exports ahead of retaliatory tariffs.”

At the end of the day the current GDP number is a nice one but as Mitra pointed out it is much more accurate to engage “complementary measures” involving people as well as products, as an analytic tool.