Here’s something from today’s Wall Street Journal (full article) that shows the American bias toward optimism, at least regarding economic growth.
(Regarding the actual numbers, don’t forget that much of American GDP growth is simply due to population growth and it is unfair to compare American numbers to those of a country such as Japan or Germany where the population is stable.)
You make a very important point here that I’ve only seen Gail Tverberg make on the internets, that a large component of GDP growth is simply population growth. Tverberg estimates that half of GDP growth is directly attributable to population increase.
Also the size of the US economy, which people are proud of for some reason, is in a large part due to the US being the third most populated country in the world. The US economy is the second largest in the world.
On the optimism bias, while I’ve known that these numbers have been consistently too optimistic, I always assumed that the senior leadership of the fed had access to the real data, and the numbers put out for the public were heavily, well, decorated. But obviously there is no way for me to really know this, and they may honestly believe these forecasts.
Job growth ex population growth during Reagan vs Obama:
http://www.thegatewaypundit.com/wp-content/uploads/obama-reagan-job-growth.png
A big chunk accrues from the dollar’s position as the world’s reserve currency, The exact amount is debated, but even those who minimize its importance acknowledge at least 0.3 to 0.5% extra GDP growth per year.
Does the Fed always over-project or is this a recent development?