Per Capita GDP in Decline

The country is in an uproar over the immigration crisis that Obama’s refusal to enforce the laws has left us in and, at the same time, I find myself with limited time for writing posts.  You can read opinion pieces on the immigration mess anywhere and everywhere right now.  So I though a better use of my time would be to focus on the recent downward revision in GDP (gross domestic product) and use it as an example as to why America’s ridiculously high rate of legal immigration – not to mention Obama’s refusal to enforce the border and deport illegal immigrants – is so bad for the American economy.

The BEA (bureau of economic analysis) last week dramatically lowered its final reading of GDP for the 1st quarter to an annual rate of decline of 2.9%.  The harsh winter took much of the blame.  Adjusted for inflation, GDP still remains higher than it was in the 3rd quarter of 2013.  And it’s risen by nearly a trillion dollars since the 4th quarter of 2007, when the recession first began.

But you shouldn’t care about overall GDP.  What matters is each American’s slice of the pie, or per capita GDP.  When population growth is taken into account, per capita GDP fell to its lowest level since the 2nd quarter of 2013.  And it’s barely budged in the past seven years (going back to the 4th quarter of 2007 again).  Here’s the chart:  Real Per Capita GDP.

Since the end of 2007, per capita GDP has risen by only $317 per person, an annual rate of increase of only 0.09%.  That includes all Americans, and it’s been widely reported that all of the gains are concentrated in the top 1% of Americans.  Take away that top 1%, and per capita GDP has actually declined during the supposed “recovery” that has taken place since the end of the recession.  And that’s in spite of a trillion dollars in stimulus spending by the federal government and four trillion dollars of stimulus provided by the Federal Reserve.  Imagine how bad it’d be if we took away that $5 trillion that has been poured into the economy in the past seven years.

Declining per capita GDP is one of the outcomes predicted by the inverse relationship between population density and per capita consumption (which is inextricably linked to per capita employment).  As our population continues to grow beyond its optimal level (thanks entirely to both legal and illegal immigration), it’s inescapable that per capita GDP will decline, even as overall GDP continues to grow slowly.

In other words, immigration is the driving force behind a decline in Americans’ quality of life.  Yet, the deep pockets that fund our politicians continue to advocate for increased immigration and population growth.  They want more consumers to grow their bottom lines.

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3 Responses to Per Capita GDP in Decline

  1. Population growth would not even be an issue if we did not let large multinational companies write our trade policy to their advantage with no regard for the well-being of this country. If we did not run a massive trade deficit what would our per capita GDP be? I bet we would need more workers just to fill all of the job openings.

    • Pete Murphy says:

      We wouldn’t need more workers, but it’d go a long way toward soaking up the 16 million people who are currently unemployed. Our current trade deficit in manufactured goods is about $600 billion per year. Assuming that 2/3 of the cost of goods is labor (a fairly typical figure), then our trade deficit eliminates $400 billion in American jobs. Assuming an average wage of $50,000 per year, that’s 8 million jobs. Add an equal number of jobs for ancillary activities that support manufacturing, and there you have it – unemployment completely eliminated.

      It’s now been almost 40 years since we had a trade surplus and our cumulative trade deficit is approaching $13 trillion. Just imagine how much better things would be if that money had been plowed back into our economy instead of being shipped overseas. No federal deficit. No health care crisis. Modern infrastructure. Top-notch education system. It goes on and on.

      • Yep, it is really too bad the we decided that free trade is part of the doctrine of the American religion. We can only imagine how great things would be if we had have stuck to equitable trade policies.

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