The Growth in Real U. S. Per Capita GDP

It’s going to be difficult to make heads or tails out of this post without reading my prior post on patterns of growth first. The graph above is of the longterm growth in real U. S. per capita GDP. It has increased with remarkable regularity at the rate of 1.8% per year. The logarithmic scale of the graph makes it look as though this is linear but it’s exponential.

The graph above illustrates the growth of U. S. population from 1790 to the present (and beyond). Numbers prior to 2000 are actual, beyond that are estimated but the estimation up to 2010 is good enough that it illustrates the point I’m trying to make. U. S. population has grown exponentially.

I won’t bother showing a graph of U. S. GDP growth. It’s approximately the same as the growth in population compounded at 1.8% annually, i.e. it’s exponential, too. Now some more or less random observations.

This behavior of the U. S. economy appears to be distinctive. Other large, developed economies do not show the stable per capita GDP growth of the U. S. and, indeed, many developed economies have seen actual declines in the per capita GDP growth rate.

Assertions of real per capita GDP growth in the U. S. in excess of 3% over the long term are nonsense. Perhaps it will continue at 1.8%. It may decline as it has in other developed economies.

Linear growth, exponential growth, and logistic growth all appear the same for some period. Growth continues until it doesn’t.

Malthus was right to the extent that population increases exponentially until it exceeds the carrying capacity of the environment. He did not anticipate that technological progress would alter the carrying capacity.

A significant proportion of U. S. population growth is due to immigration.

Demographic patterns in Latin American and the Caribbean strongly suggest that emigration to the U. S. will slow.

62% of immigration to the U. S. is from Mexico. The rate of immigration from Mexico has slow substantially in recent years for a variety of reasons including the U. S. economic downturn, improvements in the Mexican economy, and demographic patterns in Mexico.

Now some questions.

  1. Is there some good theoretical explanation other than historic experience for the 1.8% U. S. rate?
  2. Are there reasons to believe that the economy will grow exponentially and that will be sustainable?
  3. What is the carrying capacity of the U. S.?
  4. The world?
  5. Is technological advancement showing linear growth, exponential growth, or logistic growth?
14 comments… add one
  • The reason why nobody has commented on this post is that nobody can answer your questions. I know I can’t.

  • PD Shaw Link

    Me neither.

  • steve Link

    Because we are exceptional?


  • Icepick Link

    Attempted partial answers.

    One: Perhaps we have had such large growth for so long because we had an entire continent to develop. Two hundred years ago most of Europe, especially much of southern and all of western Europe, was already very developed for the time. So they had less potential growth to maximize their capabilities. (Maximize with respect to the then-current state-of-the-art.) That trend ends at some point after WWII, though. After that I’ve got no idea.

    At best that only partially explains everything, but I suspect it has something to do with it. This is analogous to why countries like China can have such high growth rates compared to us now.

    Two: Only technological breakthroughs of a significant nature make me believe that is possible, or possibly the rewards to be gained from cultivating some new frontier. The only frontier that is truly available for such exploitation would be space. Technological breakthroughs in transportation, material science and biological science will be necessary for that to happen. (If we could build a working beanstalk, space suddenly becomes both accessible AND cheap.) Another potential tech breakthrough with radical growth prospects would be the creation of a super-conductor that worked at “normal” temperatures, say anything up to three or four hundred degrees F. It would have to be relatively cheap to manufacture, though, so I consider that part of the breakthrough. Absent something along those lines, I don’t see such growth being possible.

    Three: Absent cheap oil, we’re probably at the capacity, or even over it.

    Four: Absent cheap oil, a lot less than are currently alive.

    Five: That depends on what you mean by technological growth. Our electronic doohickeys aren’t evolving so much as going through a revolution every couple of years. I was just looking at some cell phones from about ten years ago, and it was amazing – they were bulky, and all they did was phone calls. But the cell phones available today do more than PCs did twenty years ago. Or even ten, really. But all that is just perfecting already developed widgetry. (Granted, there seems to be a lot more that can be done with them.)

    I don’t know that we’re getting much in the way of fundamental breakthroughs though. Look at space flight: we’re still using the same kinds of chemical rockets developed before WWII, and we seem to have largely reached the limits of that technology. But how about mass-produced materials manufactured from carbon that have amazing tensile strength? (See the beanstalk mention above.) Where are the room-temperature superconductors? We are the fusion nuclear power plants? I’ve been hearing about those fusion plants since I was a boy, and if anything we seem farther away from them now than ever. (I.e., we have over thirty more years of data explaining why they don’t work.)

    Even our medical advances seem to be hitting walls. We seem to be finding lots of compounds to make certain all us men-folk have rock hard cocks well into our dotage, but are we really seeing all that much development of the cancer wonder drugs that people have been seeking since before I was born? A lot of the medical advances now seem to have as much to do with electronics improvements as anything else. A lot of stuff just doesn’t seem to be changing all that much. Stem-cell research may change that, but that may well be more curse than blessing. We can’t afford all the medical crap we’ve got now, how will we afford all of this stuff plus all the bio-engineered body parts?

    Short answer: For electronics, we are experiencing exponential growth. (Although I’m not sure what good it will do you if your phone could fly the shuttle, given there won’t be any more shuttle flights.) For everything else we will be lucky if we don’t completely flat-line.

  • This is analogous to why countries like China can have such high growth rates compared to us now.

    I’m not sure whether it’s analogous or not. I think that 1) China is growing rapidly but not as rapidly as it says and 2) much of the growth is due to moving labor resources from relatively unproductive subsistence farming into manufacturing. That’s very close to what Soviet Russia did 80 years ago and for a couple of decades the Soviet economy was the marvel of the world. You know how that turned out once they’d moved as many millions of farmers as they could into the factories.

    Re: the pace of technological advancement cf. an earlier post here.

  • Icepick Link

    think that 1) China is growing rapidly but not as rapidly as it says and 2) much of the growth is due to moving labor resources from relatively unproductive subsistence farming into manufacturing.

    I agree on both points. But it is still analogous in this sense: They have much farther to go to reach economic state-of-the-art. They’re just starting with a humonguos population base on their much-less-developed-than-the-“West” giant piece of real estate.

    As for the Soviets and the farmers, they didn’t wait until they had already moved all the NEEDED farmers to the factories to start on the solution to the problem of what to do with the excess. The Soviets were very good about planning, in that way.

  • Is there some good theoretical explanation other than historic experience for the 1.8% U. S. rate?

    To the best of my knowledge, no. It remains a bit of an oddity to economists doing growth stuff. I dabbled in growth economics, but never uncovered anything to explain this.

    Are there reasons to believe that the economy will grow exponentially and that will be sustainable?

    So long as the growth rate is in a given range the growth will be exponential. That is if growth is above say, 1% then it will be exponential because growth at 1% would form a lower bound.

    For growth to no longer be exponential you’d have to have the growth rate go to zero or negative for an extended period of time. Could we reach such a “steady state”? We’d need population growth to be zero. We’d have to have capital accumulation adjust so that it replaces depreciation. And we’d still have to factor in various shocks (both exogenous and endogenous–i.e. a technological break through might move us out of a steady state).

    What is the carrying capacity of the U. S.?

    There is probably no fixed number. Given 1850’s technology would yield a carrying capacity different than say 1950’s or 2050’s. Is there an upper bound? I don’t know, probably, but who knows what it is. Ideally we’d like to know the least upper bound. Saying that 10 trillion is an upper bound is probably not helpful.

    The world?

    See the above answer for the U.S.

    Is technological advancement showing linear growth, exponential growth, or logistic growth?

    Off the top of my head, I’d say it is probably exponential. There might be some physical constraints, but then again humans have been pretty adept at over-coming such obstacles in other areas. So we theoretically speaking we can’t rule out logistic either, just that we might not have reached the inflection point where the graph becomes concave vs. convex.

  • Fake Smile Link

    Adjust it for inflation and exchange rates and it will not be going up much at all.

  • Adjust it for inflation and exchange rates

    Real per capita GDP is adjusted for inflation.

  • San Pedro Link

    True GDP Per Capita in the U.S. is about US$18,000 for year 2011, which is around Eastern European levels. That includes some of the debt. If we include all of the debt then the US GDP P/C would become $2000 with the levels of poorest countries.

  • You might want to re-check your math. While you’re at it, re-calculate the German, French, and Italian per capita GDP using the same method.

  • San Pedro Link

    True GDP per capita for Germany is around $35,000. They are much more frugal than US Americans. When you drive around the U.S. you will,notice the hidden poverty and low life quality index. Taking in account their 14+ trillion $ debt, makes U.S. one of the poorer countries in the world, because if the USA pays off all of its debt in an eye-blink, it will become no more richer than India (per capita). Think about it and calculate – most manufacturing jobs are no longer in the U.S., they are deep in debt, they are pretty lazy, they depend on foreign oil, they do not have nor extract much of natural resources, they lives off foreign debt, very expensive wars and how can US GDP p/s be $47,000 as CIA indicates? That is a lie and fake data. The true GDP p/s for the U.S. is maximum US$18,000 and perhaps closer to $3000 if all debt is paid off in an instant. I have businesses whihc have been decimated, we lost 95% of customers and it feels like this is not “America” as it used to be but rather South Africa or Malaysia at best. Which makes EU’s Eastern Europe in comparison to he USA look great.

  • Robert Kennedy Link

    “Patriotic” business and corporation owners in the United States of America for a couple decades were proud to fire their own co-citizens and send their jobs overseas, to a communist China, for instance, in order to make a longer buck. Today those corporations can be “proud” to have supported a communist regime, which will turn its back to them. U.S. is quickly becoming a second rate third world country, thanks to the greed of those “patriotic” “Americans”. Today the world’s most vibrant economy is run by communists and while Chinese economy is somehow and partly a free market economy, it is tightly controlled by the Communist Party and with change in leadership it can quickly become a nightmare sending the world into chaos. This is why it is important to have hundreds of small strong economies in the world as opposed to a handful of large ones. As a final thought, US has been on the path of self-destruction since Bush took over in 2001 sending 3000+ of his co-citizens to heaven or hell by committing the heinous crime known as the Inside Job and only a very uninformed fool may believe it was the job of some terrorists with box cutters, the ridiculous story, an insult to our intelligence and common sense.

  • JOHN Link

    Robert Kennedy- What an eloquent nut job you are.

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