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Selected Charts on the Global
Economy
Larry Hatheway
Jackson Hole Economics
larry@jheconomics.com
Outlook 2020
A long expansion endures
US economy set to extend its longest expansion on record
 No overheating or imbalances, supportive monetary & fiscal policies
Global growth likely to re-accelerate modestly
 Diminished risk of trade wars to support recoveries of global manufacturing & trade
 Chief beneficiaries are Asian emerging economies & western Europe
Inflation has remained low, defying conventional forecasts. Expect more of the same
Slowing real per capita income growth fuels dissatisfaction
Biggest risks are political not economic
 Uncertainty takes its toll on business investment
 Geo-political conflict and US elections pose new risks in 2020
Source: JHE
US: Longest expansion on record
Expansions don’t die of old age
Source: NBER, Jackson Hole Economics
0
20
40
60
80
100
120
140
160
Current 1991-2001 1961-1969 1982-1990 1873-1882 Postwar Avg Avg since 1854
Duration of US expansions (in months)
Over 2 million new jobs created in US over the past year
But fewer than 4% of all new jobs are in manufacturing
Source: BLS, Jackson Hole Economics
-
500,000
1,000,000
1,500,000
2,000,000
2,500,000
New jobs Private Services Manufacturing
New jobs Private Services Manufacturing
Inflation less responsive to cycle
US inflation trending lower for past four decades
Source: IMF WEO, Jackson Hole Economics
-10
-5
0
5
10
15 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
Output gap CPI inflation
Real wages rising, yet slower than in prior expansions
Why Americans feel left out
Source: BLS, Jackson Hole Economics
0.0
0.2
0.4
0.6
0.8
1.0
1.2
1.4
1990-1999 2000-2009 2010-2018
Average annual real wage gain, by decade
Real per capita income growth has slowed across G7
Jobs are plentiful, but living standards are advancing at a slower pace
Source: IMF WEO, Jackson Hole Economics
0.0% 0.5% 1.0% 1.5% 2.0% 2.5%
1981-2019
1981-2007
2008-2019
Political risk weighs on economic activity
Measures of uncertainty at unprecedented levels
Source: www.policyuncertainty.com, Jackson Hole Economics
0
50
100
150
200
250
300
1985
1986
1988
1990
1991
1993
1995
1996
1998
2000
2001
2003
2005
2006
2008
2010
2011
2013
2015
2016
2018
US Policy Uncertainty Index
0
200
400
600
800
1000
1200
1995
1996
1997
1998
1999
2000
2002
2003
2004
2005
2006
2007
2009
2010
2011
2012
2013
2014
2016
2017
2018
2019
China Policy Uncertainty Index
0
200
400
600
800
1000
1200
1985
1986
1988
1989
1991
1992
1994
1996
1997
1999
2000
2002
2004
2005
2007
2008
2010
2011
2013
2015
2016
2018
US Trade Policy Uncertainty
‘…the only thing we have to fear is…fear itself..’
-Franklin Delano Roosevelt, March 1933
Falling investment share in GDP (in %)
Despite technological innovation and high returns, investment is lackluster
Source: IMF WEO, Jackson Hole Economics
15
17
19
21
23
25
27 1980
1981
1982
1983
1984
1985
1986
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
G7 share of invesment in GDP EU share of invesment in GDP

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Selected charts

  • 1. Selected Charts on the Global Economy Larry Hatheway Jackson Hole Economics larry@jheconomics.com
  • 2. Outlook 2020 A long expansion endures US economy set to extend its longest expansion on record  No overheating or imbalances, supportive monetary & fiscal policies Global growth likely to re-accelerate modestly  Diminished risk of trade wars to support recoveries of global manufacturing & trade  Chief beneficiaries are Asian emerging economies & western Europe Inflation has remained low, defying conventional forecasts. Expect more of the same Slowing real per capita income growth fuels dissatisfaction Biggest risks are political not economic  Uncertainty takes its toll on business investment  Geo-political conflict and US elections pose new risks in 2020 Source: JHE
  • 3. US: Longest expansion on record Expansions don’t die of old age Source: NBER, Jackson Hole Economics 0 20 40 60 80 100 120 140 160 Current 1991-2001 1961-1969 1982-1990 1873-1882 Postwar Avg Avg since 1854 Duration of US expansions (in months)
  • 4. Over 2 million new jobs created in US over the past year But fewer than 4% of all new jobs are in manufacturing Source: BLS, Jackson Hole Economics - 500,000 1,000,000 1,500,000 2,000,000 2,500,000 New jobs Private Services Manufacturing New jobs Private Services Manufacturing
  • 5. Inflation less responsive to cycle US inflation trending lower for past four decades Source: IMF WEO, Jackson Hole Economics -10 -5 0 5 10 15 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Output gap CPI inflation
  • 6. Real wages rising, yet slower than in prior expansions Why Americans feel left out Source: BLS, Jackson Hole Economics 0.0 0.2 0.4 0.6 0.8 1.0 1.2 1.4 1990-1999 2000-2009 2010-2018 Average annual real wage gain, by decade
  • 7. Real per capita income growth has slowed across G7 Jobs are plentiful, but living standards are advancing at a slower pace Source: IMF WEO, Jackson Hole Economics 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 1981-2019 1981-2007 2008-2019
  • 8. Political risk weighs on economic activity Measures of uncertainty at unprecedented levels Source: www.policyuncertainty.com, Jackson Hole Economics 0 50 100 150 200 250 300 1985 1986 1988 1990 1991 1993 1995 1996 1998 2000 2001 2003 2005 2006 2008 2010 2011 2013 2015 2016 2018 US Policy Uncertainty Index 0 200 400 600 800 1000 1200 1995 1996 1997 1998 1999 2000 2002 2003 2004 2005 2006 2007 2009 2010 2011 2012 2013 2014 2016 2017 2018 2019 China Policy Uncertainty Index 0 200 400 600 800 1000 1200 1985 1986 1988 1989 1991 1992 1994 1996 1997 1999 2000 2002 2004 2005 2007 2008 2010 2011 2013 2015 2016 2018 US Trade Policy Uncertainty ‘…the only thing we have to fear is…fear itself..’ -Franklin Delano Roosevelt, March 1933
  • 9. Falling investment share in GDP (in %) Despite technological innovation and high returns, investment is lackluster Source: IMF WEO, Jackson Hole Economics 15 17 19 21 23 25 27 1980 1981 1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 G7 share of invesment in GDP EU share of invesment in GDP