The government announced yesterday that fourth quarter GDP growth slowed from 5.0% in the third quarter to only 2.6% in the fourth. That’s a dramatic slowdown – worse than analysts expected, and the stock market reacted accordingly.
But what matters to you is not the size of the pie, but the size of your slice. Thanks to the president’s immigration policies, a lot more people are beginning to crowd around the table, shrinking your slice. Each quarter, in conjunction with tracking per capita GDP, I also track the rate of increase in the population. Check out what’s been happening in the past year compared to the previous 13 years of the century: % change in population (quarterly). As a result, the growth in real (adjusted for inflation) per capita GDP slowed to 1.4% in the 4th quarter. Here’s a chart: Real Per Capita GDP.
Since the end of 2007, real per capita GDP has risen only 3%. That’s an annual rate of growth of only 0.4% – barely any growth at all, and that’s if you believe the government’s inflation calculation. No wonder incomes are stagnant when the economy is too.
One of my predictions for 2015 was that GDP growth would be sub-2% for the year and would be on the brink of recession by the end of the year. This 4th quarter report already gets us close.