As reported by the Bureau of Economic Analysis yesterday morning, the preliminary estimate of first quarter GDP rose by 2.5%, disappointing economists who had expected a rise of over 3%.
But, since what matters is not the size of the pie but the size of your slice, macroeconomic growth that is offset by population growth is no economic growth at all. Population growth dragged per capita GDP growth down to 1.8%, following a drop of 0.4% in the fourth quarter. Were it not for the fact that the 1st quarter is traditionally the lowest quarter of the year for population growth (thanks to the seasonality of immigration), the growth in per capita GDP would have been even lower.
Here’s a chart of real (adjusted for inflation) per capita GDP: Real Per Capita GDP. As you can see, it still remains below its peak of $43,967 reached in the 4th quarter of 2007 – the onset of the “Great Recession.”
And here’s a chart of the change in per capita GDP: Change in Real Per Capita GDP. As you can see, the first quarter of 2013 was pretty unremarkable. Since the beginning of 2005, per capita GDP growth has averaged only 0.47% – and that assumes that inflation is calculated honestly, something the government has long been suspected of understating to suit its own interests. In other words, we are poised on the brink of no growth … or worse.