We are told that the GDP has gone up every year. Population growth has been modest. The published per-capita GDP has gone up, from $33,000 to $46,000 (as of 1 January 2008). That seems positive...
From CIA World Factbook, via Index Mundi:
But we are running a deficit. The USA's account balance was $ -738,600,000,000 in 2007. There has been substantial deterioration in our infrastructure, which is a sort of depreciation. The stock market has taken a beating. One blogger (Ilargi, admittedly a doomer) has estimated that wealth in the USA is being lost at a rate of ten million dollars per minute.
Major banks have run up at least five hundred billion dollars in losses, just in the subprime part of the housing bust. That is probably going to exceed one trillion, likely much more. Plus, there is a coming crisis in alt-A mortgages. Even prime mortgages are going sour:
NEW YORK (CNNMoney.com ) -- Prime mortgages are starting to default at disturbingly high rates - a development that threatens to slow any potential housing recovery.
The delinquency rate for prime mortgages worth less than $417,000 was 2.44% in May, compared with 1.38% a year earlier, according to LoanPerformance, a unit of First American (FAF, Fortune 500) CoreLogic that compiles and analyzes residential mortgage statistics.
Delinquencies jumped even more for prime loans of more than $417,000, so-called jumbo loans. They rose to 4.03% of outstanding loans in May, compared with 1.11% a year earlier...
...Also last month, JP Morgan Chase (JPM, Fortune 500) CEO Jaime Dimon called prime mortgage performance "terrible" and suggested that losses connected to prime may triple...
The Afghanistan and Iraq wars are going to keep costing us serious money, for many years to come.
Our goodwill around the world is in the tank. Hard to put a price tag on that, but it is a consequential loss, with serious financial implications.
Consumer spending has declined; retail sales are down. Eight US banks have failed this year. Many more are expected:
"Regulators are bracing for 100-200 bank failures over the next 12-24 months," says Jaret Seiberg, an analyst with the financial services firm, the Stanford Group.
The FDIC's reserve to insure bank deposits is strained, by the way.
Economists must have a way of putting a price tag on these increased risks, although I don't know what that method is. Similarly, there is a cost to climate change, loss of species diversity, and other environmental problems. I have no idea how big of a cost that would translate to. Probably no one does. But it is big.
So if you take the supposed increase in wealth, and subtract all the losses, the account deficit, depreciation of infrastructure, and subtract some more for the increased financial risks, the loss of goodwill, and the environmental damage, the the result positive, or negative? Are we running the Yankee ingenuity machine as fast as we can, only to be moving backward?
Comments
You've left out a couple other major factors in the equation. Most of those folks in mortgage jeopardy (and many others) probably also have numerous maxed out credit cards. What's the forecast for the consumer credit market?
Also, and perhaps most important for the overall economy, many (if not most) people in the bottom 2/3 of the income ladder have seen little or no growth in real income since 2001. If they, "the consumers," have no income growth, how can the economy continue to grow?
Posted by: chezjake | August 14, 2008 8:54 AM
Hmph. Per capita wealth stats, of course, don't tell which of the caputs have wealth, and how much. Other stats generally show that the vast majority of Americans have less wealth and far less leverage than they did 30 years ago.
My favorite gripe is when stats talk about "household income". Today's households have half the kids (or less) and double the workers of the 1950s, so doesn't that mean that if household income is flat, then personal income has fallen by a factor of 2, 3, 4 or more?
But no matter what measures you use, I agree the USA is in the cacky, for sure.
Posted by: Noni Mausa | August 14, 2008 10:01 AM
"The love of money is the root of all evil".
Posted by: stumpy | August 14, 2008 8:55 PM