Dr. Yandle's Quarterly Economic Update: March 2012
1. Getting off the Ground
The Incredible Boom
Why Not Here?
The Nation
Regions
Outlook
Mercatus Capitol Hill Campus
March 15, 2012
Bruce Yandle
yandle@bellsouth.net
2. 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!
4. 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.
11. 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
Iran
Congo (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
12. Mean Household Income Earned by Top 60%, 1967 - 2010
(Constant 2010 Dollars)
60,000
$49,309 for 2010
AND (still) able to
50,000 pay our bills.
40,000
30,000
20,000
10,000
0
16. Top 25 Countries based on 2010 GDP
16,000,000
14,000,000
12,000,000
HUGE
ECONOMIC
Millions of PPP Dollars
10,000,000
8,000,000
ENGINE
6,000,000
4,000,000
2,000,000
0
World Bank
17. Producer of World Reserve Currency
We print money, and the world takes it!
46. 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.