Dr. Yandle's Quarterly Economic Update: March 2012
Getting off the Ground The Incredible Boom Why Not Here? The Nation Regions OutlookMercatus Capitol Hill CampusMarch 15, 2012Bruce Yandleyandle@bellsouth.net
The Coming Global Boom• In 2011, world GDP stood at $71 trillion dollars.• If over the next 30 years, real GDP grows at an average rate of 2.5%, the long historic average, then the 2042 level of real GDP will double to $142 trillion dollars.• There will be as much total GDP generated in those 30 years as has been generated cumulatively over history.• That’s a lot of stuff!
No!• In 2011, the world population stood at 7 billion. Per capita GDP was $10,100, in 2011 dollars.• The world 2040 population is estimated to reach 9.0 billion.• If GDP grows at 2.5% annually, then per capita GDP will stand at $15,777. $15,777 is lot a more than $10,100.
0 100,000,000 150,000,000 250,000,000 350,000,000 50,000,000 200,000,000 300,000,000 United States Indonesia Brazil Pakistan Bangladesh Nigeria Russia Japan Mexico Philippines Vietnam Ethiopia Germany Egypt Turkey IranCongo (Kinshasa) Thailand France United Kingdom Italy China & India Omitted Burma South Africa Korea, South 2010 Population, Top 40 Countries, Spain Ukraine Colombia Sudan people! Tanzania Argentina Kenya Poland Algeria Canada Uganda We are third most populous. Lots of Morocco Peru Iraq
Mean Household Income Earned by Top 60%, 1967 - 2010 (Constant 2010 Dollars)60,000 $49,309 for 2010 AND (still) able to50,000 pay our bills.40,00030,00020,00010,000 0
2011-12 Outlook• GDP growth will range from 2.2% to 2.5% across 2012.• The U.S. unemployment rate will stay in 8.2% to 8.9% range.• Inflation will rise to 2.0%-3.0%, compared to 2011’s 2.5%.• Interest rates will rise, with a 100 basis point increase at the long end of the yield curve by the end of 2012. There are six hazards or ghosts from the past that may disturb the outlook.• Fear-driven increases in personal savings, which means rebuilding consumer net worth but further reductions in retail sales.• Rising energy prices.• A potential for massive inflation or credit market manipulation by the Fed to avoid it.• Government entanglement in the economy that regulates and otherwise limits economic freedom.• A huge deficit that must be dealt with. Taxes? Cut spending? Print money?• Gradual loss of reserve currency status• Election year craziness.