“U.S. Economy Grew Anemic 0.7% in Fourth Quarter” is a WSJ article on the latest GDP numbers for our country. The headline is inaccurate because the economy grew at a 0.7 percent annual rate during the fourth quarter. The actual “growth” was thus 0.175 percent.
Nowhere does the article mention the population size. If the population grew by more than 0.175 percent during the quarter, the per-capita GDP actually fell. If the popular shrank, on the other hand, then each of us is potentially significantly richer (though perhaps the evil Koch brothers can take all of the growth for themselves!).
“U.S. Economy Barely Grew Last Quarter, Stoking Concerns About Momentum in 2016” is the New York Times equivalent story and it has the same omission (though at least they don’t have the arithmetic wrong in the headline).
The CIA Factbook says that the growth rate is 0.78%. Thus, adjusted to a per-capita basis, the U.S. economy was shrinking slightly during the fourth quarter of last year. Considering the lack of cold and snow in the Northeast, which ordinarily would have given the economy a boost, the core shrinkage rate was probably higher.
Assuming that the CIA and Department of Commerce numbers are both correct, why would we be congratulating ourselves for a growing economy when in fact we have a shrinking economy from the perspective of the average resident?
I can’t tell if you’re being disingenuous or not, but the answer is obvious. For many years it has been taboo in the mainstream media to talk about per capita GDP because it is so important for pro-immigration propaganda to say that immigrants “raise the GDP”.
Because GDP is produced by the economy, not by people.
Carl: That sounds sensible, but it is people who read newspapers. If the economy grows at the rate of population growth, shouldn’t the headline be “population grows slightly; economy stays the same”? What all of the Scandinavian countries merged into one big one. Now they have roughly 4X the GDP. Should the news story on the merger be “300% GDP growth”?
Small correction needed:
Scandinavia consists of Norway, Denmark and Sweden, so 4X should be 3X (by weighted average). Otherwise, I fully agree with the substance, GDP per capita is the way to go if you want to report news worth reporting!
If you add Finland, Iceland (and perhaps Faeroe Islands), you get the Nordic Countries, which many Americans call Scandinavia.
http://goscandinavia.about.com/od/scandinaviatripplanning/p/scandnordic.htm
Perhaps a good spot to try out your latest camera, but expensive to fuel your aircraft or car.
(sorry, my maths aren’t very strong) Wouldn’t you also need to divide the population growth rate by four? So, a quarterly population growth of 0.195 and a quarterly GDP growth of 0.175. Still negative, but very close.
To answer the question in the header, because it’s depressing. For example, Sweden handled the 2008 crisis extremely well compared to many and exited the crisis in good health and with nice GDP growth. Considerable international praise. Yet the GDP/capita turned out to be unchanged.