While the mainstream media and the Bureau of Economic Analysis provide us with the quarterly gross domestic product data (not to mention its numerous revisions), there is one economic growth statistic that is rarely discussed, a statistic that shows the real health of the economy.
As we all know, the population of the United States has grown over time. Here is a graph showing how the population of the United States has grown since the beginning of 1950:
In 1950, the population of the United States was 76.09 million. Since then, the population has risen to its current level of 318.86 million.
Here is a graph showing how the Gross Domestic Product of the United States has grown over the same time period:
Over the 65 year period, America's GDP has grown from $281.2 billion to $18.148 trillion.
Now, if we combine the two data sets and correct GDP for inflation (i.e. real GDP), here is a graph showing per capita real gross domestic product:
Per capita real GDP has risen from $13,819 at the beginning of 1950 to $50,993 in the fourth quarter of 2015.
Now, let's see how per capita real GDP has grown on a year-over-year basis since 1950:
A quick glance certainly makes it appear that the year-over-year growth in per capita real GDP has slowed since the end of the Great Recession when compared to previous post-recession periods. Let's look at the record as shown on this table:
For those of you who are graphically oriented, here is the same data in in graphic form:
As you can see, other than the mini-recession at the beginning of the 1980s, per capita real GDP growth has been on a downward slope since the late 1950s with the economic expansion since the end of the Great Recession showing very modest per capita real GDP growth of only 1.4 percent compared to growth levels of over 3 percent for most of the period between 1958 and 1990. This tells us:
1.) Population is growing at a faster rate than the economy.
2.) The economy is growing at a slower rate than population.
3.) A combination of the two.
How much of an impact does this slowing per capita GDP growth rate have on the size of the economy? Using the rule of 72, when the economy was growing at 3.5 percent, the economy was doubling every 20.6 years. Now that the economy is growing at only 1.4 percent, it takes 51.4 years for the real per capita economy to double, more than twice as long as it did at the higher growth rates of the 1980s and 1990s.
As has become obvious since the end of the Great Recession, this economic recovery has been far from normal. Despite the massive monetary intervention by the Federal Reserve and its peers around the globe, something in the economy just doesn't feel right for millions of Americans. Perhaps the slowing per capita growth rate in real GDP goes a long way to explaining why many people never really put the Great Recession behind them.