Tuesday, August 23, 2011

Looking at GDP Per Capita – The Great Recession is Even Worse

Lost:  $13,000 per person in the U. S.

The Economist is a very clever magazine, with very clever writing and very clever analysis.

The decided to take a look at GDP per capita, in order to see how much economic activity has declined from the peak before the Great Recession after population is removed from the numbers.  Since an increase in population will increase economic output all by itself (note to Gov. Perry)  by looking at GDP per person the impact of population on growth is factored out.

Here are the results.

If countries are ranked according to the change in real GDP since the end of 2007, Canada tops the league, with output in the second quarter estimated to be almost 3% higher than it was before the crisis. But Canada, like the United States, has a fast-growing population thanks to immigration, whereas the number of Germans and Japanese has started to shrink. GDP per person is therefore a better measure of relative performance.
By this gauge, Canada is still 1% below its pre-crisis level and America is almost 4% down (see chart). Even worse hit are Britain, Italy and Japan, where average income per head was 5-6% below its peak. In contrast, China’s GDP per person rose by an impressive 35% in the same period and India’s was up by 22%.
A second thing The Economist did was to compare per capita GDP with what it would have been had the growth rate of the 10 years prior to the Great Recession  continued.

If the shortfall in GDP relative to trend in each year since 2007 is totted up, America has suffered a cumulative loss of $4 trillion, equivalent to a stunning $13,000 for each person.

Gone:  $13,000 Per Person from
Policy Failure

So America if you are feeling, well, not quite as well as you did before the Great Recession, now you know why.  Failure to properly regulate the economy during the Bush Administration and failure to properly stimulate and restore the economy in the Obama Administration has had a cumulative cost of $13,000 per person.

And guess what, that number is growing not shrinking.

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