Graph, post and title have been updated to reflect the 3.26% average growth rate in private GDP since 1947.
The chart above shows annualized growth rates for: a) quarterly private-sector real GDP, calculated as real total GDP minus real government spending (which would be equal to personal consumption expenditures, gross private domestic investment, and net exports), see blue bars in chart, and b) quarterly public-sector real GDP, which is "government consumption expenditures and gross investment" (brown bars), from 2000 to 2012.
Based on the data released today by the BEA, private-sector real GDP increased by 2.31% in the second quarter this year (at an annual rate), following growth of 3.1% in Q1 2012, 5.5% in Q4 2011 and 2.3% in Q3 2011. Over the last year, private-sector real GDP increased by 3.3%, following 3.1% in the previous year, and both of those growth rates are close to the average growth rate over the last 65 years of 3.26% since 1947 (see updated chart).
Public-sector real GDP declined by -0.89% in the second quarter of 2012, and by -2.3% over the last year. Here's how the 2.3% annual decline in public-sector GDP breaks down: Defense spending fell by 4%, non-defense federal spending declined by 2% and state and local spending decreased by 1.6%. The -2.3% annual decrease in Q2 public-sector GDP is the seventh consecutive quarter of a year-over-year contraction in public-sector GDP, which hasn't happened since the early 1970s.
As I concluded a month ago following the first estimate of second quarter GDP in a post that generated almost 200 comments:
Maybe it's true that the "private sector is doing fine" and most of the sub-par economic growth measured by real GDP is simply reflecting the decreases in government spending at the federal, state and local levels, and not weakness in the private sector? In that case, maybe the sub-par recovery has some positive effects of shrinking government? And why don't more economists, analysts, and reporters calculate and report private- and public-sector economic growth separately?
Another question: Given the data above, shouldn't more people be happy that the private-sector GDP has been expanding at the historical average rate over the last several years, while at the same time the public-sector GDP has experienced the longest period of contraction in 40 years?
In that case, maybe the sub-par recovery has some positive effects of shrinking government? And why don't more economists, analysts, and reporters calculate and report private- and public-sector economic growth separately?
ReplyDeleteThe real tragedy as most economists, analysts and reporters see it, is the shrinking of the saintly government and growth of an evil, profit chasing private sector! Nothing good can come of this!!!!
And also reporting it this way may instill a little optimism in the peasants and derail Krugman's anti-alien defense project and Alan blinder's proletariat retraining centers.
given that the period of 2000-present has been the worst period of real growth since ww2, is that really the baseline we want to use to make a comparison to average? that does not seem like what we want to aim for.
ReplyDeletehow would this compare to the average private sector gdp growth from the 50's or the 80's or the 90's? (or since ww2?)
that might make for an interesting comparison.
i suspect it would set the bar considerably higher.
we might also want to take a hard look at the 0.8% price index assumption used for q2 gdp (roughly 50% lower than cpi). gdp-d has diverged very meaningfully from cpi in the last 4 quarters. using cpi as a deflator would wipe about half the reported real growth.
Sorry, the graph was mis-labeled. The 2.82% average is over the last 25 years since 1987, not the last ten years.
ReplyDeletePrivate-Sector Real GDP Grew By An Above-Average Rate of 3.3%
ReplyDeleteAlas, it is nothing like "above average" for the period after a recession while GDP is still below trend, which it is today by a mile.
It's the same for all the multitude of cheery "new high" posts on this blog. I know it is trying to be optimistic -- but even with a below-average 2% GDP growth trend rate, any "new high" set today is a good 10% below trend, which this many years after the trough of a recession is *terrible*.
exactly, declining government and burgeoning private sector is also known as Good Austerity and is wholeheartedly bullish for the USofA
ReplyDeleteexactly, declining government and burgeoning private sector is also known as Good Austerity and is wholeheartedly bullish for the USofA
ReplyDeleteThere's a high level of multicollinearity in private and public sector growth.
ReplyDeleteThe U.S. economy is still on life support, because of over $1 trillion a year of overspending by the federal government.
thanks mark.
ReplyDeletei still think it would be interesting to see this by decade.
the period from 1987 has about half it's data from the post 2000 period and i suspect that may slant it lower.
i don't have the private gdp figures in an easy to work with form (though i think i can take a cut at it from adding up segments in fred), but just taking gdp as a whole, the 90's compounded at 3.2%, and the 80's at more like 3.3%.
the 2000's were more like 1.5%.
this would seem to make it look likely that the averages of just good decades would be higher.
let me see if i can get a figure for private gdp.
The economy has moved from the bottom of the ditch to a higher level. Yet, it's not out of the ditch.
ReplyDeleteBasically, the federal government burned trillions of dollars to mostly spin the economy's wheels.
Of course, the GDP figure does not take into account the creation and consumption of homemade goods during this period.
ReplyDeleteI've updated the post to reflect the 3.26% average growth rate in real, private GDP of 3.26% for the entire quarterly GDP series back to 1947.
ReplyDeleteI've also changed the title of the post to reflect the fact that 3.3% is about average, not above average.
I wonder how much longer we can sustain $1 trillion a year budget deficits?
ReplyDeleteok, so i figured this out using fred data (gdp-g)
ReplyDeleteit looks like the 90's averaged 3.9%, the 80's 3.1%, the 70's 4.2%, and the 60's 4.8% for an average of 4% over the period from 1950-2000.
it then dropped to 1.5% from 2000-10.
it then dropped to 1.5% from 2000-10
ReplyDeleteThat decade also includes the worst recession in any of the decades mentioned.
Morganovich, you're comparing a peak to almost a trough.
ReplyDeletejon-
ReplyDeletethat's an interesting point to raise.
i presume the tendency to grow your own food and make your own shoes has dropped?
has anyone ever tried to figure out what that meant to gdp?
i'm not even sure how you would try to quantify it.
also:
ReplyDeletei have a methodological question here:
so we take gdp and we take out government consumption and investment to get private.
how does that handle things like social security, unemployment, medicare, and medicaid?
do they wind up counting as G or as private gdp?
if the latter, might this drop have to do with a shift in on what the government spends? growing entitlements as a % would look like private gdp and a shrinking government in such a case, but i'm not sure many would agree that that was really "smaller government".
You should probably address the effects of government spending and how that artificially inflates the numbers you are quoting.
ReplyDeletepeak
ReplyDelete"Morganovich, you're comparing a peak to almost a trough."
perhaps in 2000, but not in 1990 or 1980.
if we take the 10 years prior to the 2007 peak, we get 3%, still not great by historical standards and roughly 30% lower than the 90's average.
It's better to calculate per capita real GDP growth, to control for population growth, over long-wave boom-bust cycles.
ReplyDeletePeriod - Average Annual Per Capita Real GDP Growth
1946-73: 2.26% (Boom)
1973-82: 0.96% (Bust)
1982-07: 2.22% (Boom)
"This uniform growth rate is not obtained by averaging the year-to-year percentage changes in the observed value of the series.
The annualized growth rate is the average growth rate measured over a year. In other words, it is the hypothetical constant year-to-year growth rate necessary to take the beginning-year value of a series to its ending-year value."
This comment has been removed by the author.
ReplyDeleteLarge economies tend to grow more slowly than small economies.
ReplyDeletePeak Trader: "It's better to calculate per capita real GDP growth"
ReplyDeleteI agree. But I think it's even more important to calculate GDP per capita using only the working age population.
If we include children in the demoninator, we'll find that the 1950s and 1960s Baby Boom will distort the per capita GDP figures. The Baby Bust which lasted from 1965 through about 1980 would also distort per capita GDP until the late 1980s.
Growth in the retiree population will also distort per capita GDP figures.
"...reflect the 3.26% average growth rate in private GDP since 1947"...
ReplyDeleteTrading Economics United States GDP Growth Rate graph (adjustible time span)...
Hmmm, about the only thing missing to round out this rosy view of the GDP number
is the debt...
From the Soverign Man site dated AUGUST 29, 2012: It took the United States government over 200 years to accumulate its first trillion dollars of debt. It took only 286 days to accumulate the most recent trillion dollars of debt. 200 years vs. 286 days...
So what part if any will the national debt impact GDP growth in the private sector?
PeakTrader said...
ReplyDeleteThe U.S. economy is still on life support, because of over $1 trillion a year of overspending by the federal government.
That's good news, otherwise private sector GDP wouldn't have grown near as much.
/sarc
"Large economies tend to grow more slowly than small economies"...
ReplyDeleteWell now pt I think you may have hit on a truism there amigo...
How about a round of applause for the Mongolia GDP Annual Growth Rate
peak-
ReplyDeletefor many of the reason jet mentioned (and with skew from illegal immigration that generates economic activity but not census population) there are a number of issues with per capita as well.
the 80's and 90's had considerably higher per capita growth than the post 2000 period, even if we take the peak rate going back 10 years from 2007 (21.2% over a decade to 2007 vs 25.2% for the 80's and 23.8%) and peak 10 year MA years in those decades like 1985 and 1992 show numbers over 27% and 1974 was over 29%. the 60's as a decade grew 33%.
i'm not convinced straight per capita is the way to go here because of so many comparability issues, but even if we do, the 2007 peak was not a strong one.
we also get into the serious normalization issues around inflation.
whichever cpi you believe to be correct, it did change and now reads lower. this either increases current real growth or understates that from the past.
that makes a lot of these comparisons really fraught across the 90's.
it's like swapping speeds from mph to kph in the data but adjusting the old figures.
morganovich said...
ReplyDeletefor many of the reason jet mentioned (and with skew from illegal immigration that generates economic activity but not census population) there are a number of issues with per capita as well.
I've been tempted many times to put together a lot more of my charts with per capita data, and I do track total population, working age population, NFP, etc... but haven't for precisely the reasons you note plus a few more.
H*ll, just using CPI-U alone (not CPPI) to try and show a better and more apples-to-apples comparsion produces flack - and not only here.
peak-
ReplyDeletehow did you arrive at those break points?
i just ran the census series and your dates do not line up with the yoy growth figure trends.
it looks like you just grabbed the 2 nasty recessions in 74 and 82 and used them to bookend a weak period. if you are going to insist on not using troughs as endpoints, then it does not seem like good practice to use a peak to start and a trough to end when it is not in the population data.
the growth dropped in the early 60's and was very low by the late 60's.
the late 80's and into 1990 had sub 1% growth.
""Large economies tend to grow more slowly than small economies"...
ReplyDeleteWell now pt I think you may have hit on a truism there amigo..."
not always.
in the 1800's a lot of large economies outgrew the small ones.
the big issue in mongolia (or columbia etc) is not size, it's recovery from a bad political system and the advantages of backwardness (there is a ton to upgrade and much productivity enhancing technology to import).
it's harder to grow when you are already modernized etc as you have to wait for innovation etc and cannot move faster then the development of new productivity and population. a developing country can move much faster. the incremental benefit of a new machine depends on what you are replacing with it.
Morganovich, it should be noted, the U.S. had increasingly larger trade deficits after 1980, which subtract from GDP.
ReplyDeleteBy the mid-2000s, trade deficits reached $800 billion a year or 6% of GDP. So, the 1982-07 period was a much greater era of prosperity than the 1946-73 period.
Also, the 1973-82 period was a bust phase in long-wave business cycles. There were three recessions (two severe and one moderate) with accelerating inflation.
In contrast, from 1982-07, there were two recessions (one moderate and one mild) with disinflation.
Currently, we're in the fifth year of another long-wave bust phase.
ReplyDelete"Given the data above, shouldn't more people be happy that ..."
ReplyDeleteSome completely arbitrary aggregate measure, of something completely unrelated to any individual's present condition, is roughly the same as an equally irrelevant aggregate measure from 65 years ago?
Perhaps we should tell all those people on the Gulf coast to stop complaining about the hurricane. The average weather today is roughly the same as it has been for the last 10,000 years.
This is incrementally good. Frankly, private industry has faced an unfriendly administration, rising regulation and massive regime uncertainty (what will they destroy, outlaw, regulate and mandate next?)
ReplyDeleteThe fact that anything besides government and the deficit is growing at all and not atrophying is probably a minor economic miracle.
This doesn't mean the deficit is shrinking or that the menacing clowns in government are suddenly less of a threat to Americans or that there will be blue skies ahead. But I take this to mean we've somehow persevered and that despite the massive drag of government, the economy is righting itself. Maybe it would have been faster and better without government's noose around our necks, but that option wasn't open to us.
Complaining about this is a bit like socialists complaining that since the market doesn't make everyone better off all the time that it is a failure.
peak-
ReplyDeletei'm not sure where you are going with this trade deficit argument.
sure, it subtracts from gdp, but it's a fundamentally meaningless notion. it's one of the reasons that gdp is not a good measure of economic well being.
given that (x-im) is a component of gdp, you'd expect that higher trade deficits would correspond with lower gdp growth, but, in fact, the opposite has been true.
trade deficits plummet during recessions and rise during recoveries.
the benefits of trade to production and productivity are so great that even when you stack the deck against them using the (x-im) component, it still drives more growth.
also:
are you talking about kondratiev waves? that's a pretty poorly supported theory. suck correlation as it does manage to achieve seem to have the opposite causality that it posits. it is not demographics driving economics, but economics driving demographics.
when time are bad, you put off having kids.
when time are bad, you put off having kids.
ReplyDeleteThere I have to completely disagree. It's when times are good that you either put off having kids or don't have them at all.
When times are good, the opportunity cost of having kids is too high to carve out the time and energy to bear and raise them.
When times are bad, the opportunity cost of children is quite low.
there is somehting fishy in these numbers.
ReplyDelete2011 nominal gdp was 15.09 tn.
the chained 2005 dollar figure is 13.5.
this indicates about a 10.5% deflator.
applying that to the 3.5tn us federal budget, we get 3.13tn.
yet fred is reporting that figure as 2.48.
i am concerned that entitlement spend is getting pushed into private gdp here and that we are calling at least a significant portion of ss and medicare/aid private gdp.
does anyone know how this works methodologically?
methinks-
ReplyDeletethe census data argue otherwise.
during the good periods in the 90's, population was growing around 1.2%.
by 2002 it had dropped to under 1%, and post 2008 it plummeted.
the drops come with a 6-9 month lag after a downturn, more or less what you would expect given gestation periods.
we saw this same thing in 1982 etc.
it can take years after a downturn for population growth to recover.
we see the same trend in the pure birthrate figures.
the drop in 2009 was very pronounced.
http://www.indexmundi.com/g/g.aspx?c=us&v=25
methinks-
ReplyDeletei suspect that you may be taking common wall st practice and trying to extrapolate it.
if you are wealthy and have lots of money saved and are looking at years of crappy economy ahead, perhaps you do make decisions that way, but it is not the way most folks do it.
you have kids when you can afford them (after a few good years).
downturns tend to drop the birthrate.
Morganovich,
ReplyDeleteI think you may be counting immigrants in that population number, not purely birthrates. Post 2008, H1-b visaas have for the first time been undersubscribed and greencard holders have sought economic opportunities in other countries. You'll find these immigration trends around every recession.
You've also captured another factor in your numbers - that birthrates have been trending downward in developed countries, including the United States.
Imagine you are a woman. If your career is going well, the cost of interrupting it is quite high. If you can't find employment or doing a job you don't much care about, the cost of having children is lower.
Children are not that expensive to clothe and feed. Surprisingly inexpensive. It's the time to actually bear them and raise them that can either be relatively expensive or inexpensive.
Also note that lower income households have more children than higher income households.
Speaking of birthrates.....I do always find it amusing that about 10 months after a major weather event that traps everyone inside their homes the birhtrate spikes.
ReplyDeleteYou know, when human beings are stuck inside with each other, might as well distract themselves by having a drink and then.......
might as well distract themselves by having a drink and then.......
ReplyDelete*Looks innocently* And then what?
methinks-
ReplyDeletei hear you on immigration, but if you look at birthrates (link i posted) they show the same trend.
the drop in 2009 was quite sharp.
i understand your point about career. it may well be true of higher powered women in more remunerative careers, but i do not think the way that you think about it is as representative as you suppose.
this is shown very dramatically in the direct birthrate data.
if the majority of women thought about this as you do, we would have seen birth rise in 2009, not fall sharply.
http://www.indexmundi.com/g/g.aspx?c=us&v=25
"Also note that lower income households have more children than higher income households."
ReplyDeletethe causality there is unclear though.
some may have to do with welfare state etc, but it may well be that having all those kids is WHY they are a lower income household.
i don't think that says anyhting about birthrates in response to economic conditions.
again, look at the chart i linked of the actual birthrates. that takes out any issues around immigration etc and just looks at how many babies are being born.
2009 was a serious drop. 2001-2 dropped as well.
those were periods when unemployment spiked etc.
again, i can see the logic of your thinking and it may be true for some of the most successful, but in aggregate, the opposite trend prevails.
i think you may be taking the decision set faced by a smallish minority and assuming it to be uniform across demographics.
Morganovich,
ReplyDeleteI'll take a look the link (which I missed the first time). thanks for providing it as I'm too unmotivated to fish for it myself :)
Although, I don't understand why you think I'm so special. Why don't you think that other women consider the opportunity cost of their decisions?
It's true that fewer women are in careers that have the potential to put their income in the extreme upper tail of the distribution where there are far fewer people and even fewer women. However, remuneration is not the only payoff from a professional career. Giving up status and/or slowing your progress are real costs even if your potential does not include a seven or eight figure income.
the causality there is unclear though
ReplyDeleteYes, that's true. But while the causality of a drop in birthrates (I haven't looked at the link, but I have no reason to assume you can't read numbers) around recessions seems to be obvious, it isn't. Are people really putting off planned children or are they merely so acutely stressed out their libido temporarily drops?
In other words, is the drop in birthrates just a by-product of stress just as the increase in birthrates after a snowstorm just a by-product of being stuck in the house together during bad weather or is it the result of a conscious decision?
Add to the list of things women give up when they leave their jobs - social aspects of work, economic independence and a sense of worth.
ReplyDeletemethinks-
ReplyDeletei think it is socioeconomic.
kids are expensive.
deciding to forgo work to raise them is a luxury.
you need to be able to afford it and/or need another breadwinner who can pay for both of you.
if you are a family earning $45k and times get tough, that may put it out of reach.
i know a number of women who have made a child reading choice just as you describe, but all were well paid professionals with substantial savings and working husbands in a similar situation.
many families that lose a breadwinner due to layoffs cannot say "what a great time to have kids" but must instead say "how are we going to pay this mortgage?"
Morganovich,
ReplyDeleteWe don't have a lot information about what specific variables went into the decision for anyone to have children, so we can only ever guess.
But, if a woman loses her job, it's actually a great time to have a kid - as opposed to waiting until you get another job and then having to tell your new boss you'll be taking maternity leave soon.
Sure, I can see that if a man loses his job that there may be a conscious decision to put off planned children. But, I somehow suspect that it's less of a conscious decision and more of a by-product of a "get off me! Can't you see I'm sending out resumes?" situation. I know that for a man this might seem absurd! (kidding! Kidding!)
That's my perspective, anyway.
methinks-
ReplyDeleteas you say, we can look lots of places for causality.
however, if the stress comes from a bad economy and reduces libido which reduces births, it's still the bad economy causing low birth rates.
adding steps to a causal chain does not invalidate the cause.
we could also look at it the other way and say that a bad economy might create more pregnancy creating activity as couples look for cheaper entertainment and stay home more.
it's possible to spin all sorts of stories.
but the fact that birth rates drop markedly after economic downturns is very clear in the data. i remember lots of news stories in 2009 about people putting off having families until they could afford it. i suspect this is particularly true of the young.
at 35, you might have the savings and earnings power and security from a spouse to do it, but at 25? likely not.
something causes birth rates to drop after economic downturns be it budgets or stress, but whichever, it seems to be swamping the convenient timing effect.
BTW, I'm sure some of everything happens. It can't ALL be put down to putting off planned children or a dropping libido in the face of rising stress. I'm just hesitant to declare a cause because there's a correlation. Because correlation, as we all know, does not.....
ReplyDeleteadding steps to a causal chain does not invalidate the cause.
ReplyDeletewe've meandered a bit.
Two things:
1.) If you had said that drops in birthrates are correlated with recessions, I wouldn't have blinked. I get uncomfortable when people assign causes to correlations.
2.) I took issue with your assertion that when times are bad people delay having kids. We've narrowed it to recession since, but "bad times" could mean a lot of things and I took it to mean not a lot of economic opportunities. When people don't have a lot of economic prospects and they don't expect that to change, do you really think they decide not to have kids if they want to be parents? The drive to reproduce is pretty strong. If however, we have competing interests that make reproduction expensive, reproduction is suddenly less appealing - even in the presence of a strong drive to preproduce.
I'll see if I can dig up the stats that show that as women's economic opportunities increase in a country, the birth rate drops. And this is what I was talking about.
http://www.infoplease.com/ipa/A0005067.html
ReplyDeletebirthrates from 1910 - 2009. Unfortunately, not in graph form.
What's interesting is the drop in birth rates during the Great Depression, an era before modern day contraceptives made family planning easier.
And there was a pretty significant drop in birthrate in the second half of the decade in the 1990's.
Okay, I have to stop staring at this. You can get really sucked into staring at data
"I'll see if I can dig up the stats that show that as women's economic opportunities increase in a country, the birth rate drops. And this is what I was talking about."
ReplyDeletewell, that gets really complex too if we are trying to ascertain causality.
birth rates drop due all manner of things that may be correlated including survival rates of kids, the type of labor around which an economy is based, the fact that women may be going to work in response to higher costs, etc.
pew has done some specific work on the behavior of couples and median income.
http://www.pewsocialtrends.org/2011/10/12/in-a-down-economy-fewer-births/
this bears out at a state level as well.
"A state-level look at fertility illustrates the strength of the correlation between lower birth rates and economic distress. States experiencing the largest economic declines in 2007 and 2008 were most likely to experience relatively large fertility declines from 2008 to 2009, the analysis finds. States with relatively minor economic declines were likely to experience relatively small declines.
For example, North Dakota, which experienced one of the nation’s lowest unemployment rates (3.1%) in 2008, was the only state to show even a slight increase (0.7%) in births from 2008 to 2009. All other states and the District of Columbia experienced either no change, or declines, in births during that period"
they also point to some sociological work that adds creedence to the postponement thesis.
"Experts suggest that much of the fertility decline that occurs during an economic decline is postponement of childbearing and does not represent a decision to have fewer children (Sobotka et al. 2011; Goldstein et al. 2009). In other words, people put off having children during the economic downturn, and then catch up on fertility once economic conditions improve."
this gets complex as we have large long term trends interacting with shorter term ones, but it seems that the young choosing to postpone having kids does play a significant role here.
this one has a great graph:
ReplyDeletehttp://www.prb.org/Publications/Datasheets/2012/world-population-data-sheet/fact-sheet-us-population.aspx
clearly, we see some other factors at play as well.
i have to believe that the widespread availability of affordable contraception is one of them and i suspect that it drove a lot of the drop in the 60's.
"The decline in U.S. fertility has been driven primarily by a trend among young adults to postpone having children. Forty years ago, birth rates among women in their 20s were significantly higher than those of women in their 30s. In 1970, there were 168 births per 1,000 women ages 20 to 24, compared with 73 births per 1,000 women ages 30 to 34. However, this gap has steadily narrowed over time. By 2009—for the first time in U.S. history—birth rates among women ages 30 to 34 (97.5 births per 1,000 women) exceeded those for women ages 20 to 24 (96 births per 1,000 women). In 2010, the birth rate among teens dropped to 34 births per 1,000 girls ages 15 to 19—the lowest level ever recorded in the United States.
This recent drop in births among young adults could be linked to the recession. In Europe, high rates of unemployment and low levels of economic security are strongly associated with declines in fertility among young adults.7 The economic downturn may have had a similar effect on young adults' fertility in the United States."
sure, it's possible somehting else is driving this, but the fact that it lines up so well with median incomes sure makes me think that that is the first place one would want to look for causality.
i doubt it was the success of public school sex ed.
at the risk of entering dead horse beating territory, here's one more:
ReplyDeletehttp://scientopia.org/blogs/guestblog/2011/08/05/has-the-recession-slowed-the-birthrate/
this has a scatterplot with unemployment vs fertility rates by state and show some pretty good correlation.
there's also a great graphic at the top showing fertility rate of change.
it soared in the 1998-2000 period, then dropped for the recession, then rose again during recovery before plummeting this recession.
it was also dropping during the early 90's, which was a tough time for jobs (i graduated in 1994 so it's a strong memory for me)
what dead horse?
ReplyDeleteThis is called "thinking it all the way through" - something we have become sadly unaccustomed to doing.
Okay...in 15 minutes I'm going to look at your links.
This comment has been removed by the author.
ReplyDeleteCP has today been a distraction for me from a slog through yet another piece of garbage on derivatives markets spat out by academics who can't seem to even make their case, let alone reconcile theory with practice, but have LOTS of opinions about how things SHOULD be done because we were all wandering around in the dark bumping into each other before the team of Larry, Moe and Curly, Ph.D. arrived to sort us out. So, I may be a little cranky about experts pontificating on the topic of why people they've never met do things they can't understand.
ReplyDeleteAlso, I don't set much store by surveys. People love to blame all and sundry on the economy. Every excuse over the last four years has started off "well, because of the economy/recession/this great Obama recovery...." and most of it has eff all to do with the economy. One cannot deny, though, that during recessions birth rates drop. They also drop as women gain more economic opportunity. I mention this because you were originally trying to tie changes GDP to demographics.
The first graph IS very nice. My thought when looking at it was "we need more immigrants".
The second study was interesting. Women with three children were likely to go ahead and have the fourth - even more so than childless women.
When my friends had their first child (all at the same time, strangely), they all exclaimed it was the best thing ever and I should do it right away. They loved it so much, they did it again (strangely at the same time again). After the second one they all said "you have such a great life. Why do you want to screw it up with kids?". So, I wasn't surprised by the steep drop off in third babies (recession, sun flares, ANY excuse will do). I think by the time women get to the baby number four decision they're pretty much defeated "what the hell? The house already looks like Disney World and I've given up trying to have an adult conversation."
Given what I remember from the teachings of my high school gym teacher who was tasked with drilling the fear of venereal diseases into our heads, I too doubt sex ed has anything to do with declining birth rates. Although, I went to high school in the South and there were girls in less enlightened enclaves who didn't know how they got pregnant, so...maybe I'm wrong. This was before cell phone and internet.
All I know is I love my brothers' kids. I can take care of them and when they stop being cute, hand them back to the parents.
ReplyDeletethere's also a great graphic at the top showing fertility rate of change
ReplyDeleteYes, that's very impressive. However, birthrates dropped sharply in the 90's. There was a short recession at the end of 90', but the drop off in births until the very end of the economic boom is long and steep.
Also, I'm bothered by the 15-44 age group. Teenagers and even 20-21 year olds aren't putting off having children because of a recession. Eliminating them from the data set may or may not change the numbers much, but having them in there certainly doesn't isolate the group that might be making decisions based on current economic conditions. You don't want another obvious variable messing with the data - accidental births and teenage culture.
accidental pregnancy rather.
ReplyDeleteWhen kids who come over to my house stop being cute, I look at them sternly and explain to them the consequences of their actions in a low town. Their eyes widen in terror for a moment and then they decide acting cute again is the better path.
ReplyDeleteit was also dropping during the early 90's, which was a tough time for jobs (i graduated in 1994 so it's a strong memory for me)
ReplyDeletethe 90's were not a tough time for jobs. '94 was a tough time on Wall Street. I remember that well, but by '95 everyone was in a hiring frenzy again.
Morganovich, you can ignore the data, in the context of sound economic models, and make things up, which may seem intuitive and yet wrong.
ReplyDeleteMethinks, there are two effects.
When women work, e.g. in an economic boom, particularly at high-paying jobs, they have fewer children.
Also, in an economic bust, women have fewer children, because it's less affordable.
Right, Peak. So, no matter what the birth rate declines as soon as we let women out of the kitchen.
ReplyDeleteThe lesson? Keep them little ladies barefoot and pregnant and on sedatives!
Just kidding.
morganovich
ReplyDelete"i don't think that says anyhting about birthrates in response to economic conditions."
Aren't there also higher birthrates in many poor 3rd world countries where a welfare state isn't an issue?
It almost seems like a country's per capita GDP and birthrate are inversely related.
"When women work, e.g. in an economic boom, particularly at high-paying jobs, they have fewer children.
ReplyDeleteAlso, in an economic bust, women have fewer children, because it's less affordable."
??
So no matter what, women have fewer children?
Yeah, Ron H. It's a worldwide phenomenon. As the population becomes wealthier, birthrates drop. It's a far more humane form of birth control than Ehrlich's forced sterilization idea.
ReplyDeleteI was talking about longer term trends in wealthy countries and Morganovich was talking about the drop in birth rates during recession and why that might be.
Where women have access to education, economic opportunities, they tend to have fewer children. But, this is a long-term trend.
There is an acute drop in birthrates around recessions as that is NO time to hang another young'un....I mean to think about bringing a child into this world.
We need immigrants!
peak-
ReplyDeleteso we have fewer children in booms and fewer in busts?
what makes us HAVE children?
a big part of the drop in birthrates is readily available and affordable contraception.
the pill really drops birthrates. kids become a choice, not an accident. (mostly)
this is why the US birthrate dropped so sharply in the 60's but the 70's was the decade when women saw the biggest jump in workforce participation.
and just what data am i ignoring peak?
i just provided a big pile of it.
you, on the other hand, cannot even explain why you chose your break points for booms and busts (other than cherry picking) or identify what waves you are talking about.
if you want to contribute, great, but ducking questions and making unfounded claims about my ignoring data that you cannot even explain, much less substantiate is not going to get you taken seriously.
ron-
ReplyDeletedemographics are complicated.
poor countries have lots of kids for several reasons.
1. they lack widespread and affordable birth control.
2. they have rural economies where families need the labor.
3. they have lower child survival rates, so you need more kids to wind up with labor.
there is a certain break point where you are wealthy enough to have birth control and have you kids survive frequently enough that birthrates just plummet, but that takes wealth.
i'm sure education and economic opportunities also play a role, but if i had to put my money on the most pivotal variable, it would be birth control, which takes both money and an open/secular enough society to give choice to women.
The number of births, over a period, depends in part on demographics.
ReplyDeleteLong-wave business cycles exist based on economic data like bull and bear markets exist based on stock market data.
"what makes us HAVE children?"
ReplyDeleteYou're kidding - you really don't know? :)
It should be noted, when the Baby-Boomers began to enter "prime-age" (ages 35-54) in 1982, productivity began to accelerate not only from an increase in prime-age workers, but also from a decrease in less productive workers (the 25-34 age group is more productive than the 16-24 age group, but less productive than the 55-64 age group).
ReplyDelete"in the 1800's a lot of large economies outgrew the small ones"...
ReplyDeleteWell morganovich I can't help think of that old saw for those then large economies outgrowing the smaller ones: Location, location, location...
Weren't a lot of those already large economies located in countries that had the right geography (ie access to the sea), easily harvestable resources (ie forests and minerals), and a realtively large technological base that grew from a long established educational base?
"the big issue in mongolia (or columbia etc) is not size, it's recovery from a bad political system and the advantages of backwardness (there is a ton to upgrade and much productivity enhancing technology to import)."...
Maybe I should've put the around truism but then again under today's condition it could be said to be a truism...
Anyway back to your point morganovich of bad political systems and technical backwardness of some countries, well then any positive growth is relatively speaking pretty large growth, sometimes even breathtaking growth...