Per Capita GDP Falls in 1st Quarter

April 29, 2015

The Bureau of Economic Analysis announced this morning that GDP (gross domestic product) grew at an annual rate of only 0.2% in the first quarter of this year, at the bottom end of the range of analysts’ expectations.

However, while the “pie” grew by 0.2%, the number of people crowded around the table, grew at an annual rate of 0.8%, thanks entirely to immigration.  As a result, per capita GDP – everyone’s share of the pie – fell at an annual rate of 0.6% – a recessionary figure.  Here’s a chart of real per capita GDP since 2000:  Real Per Capita GDP.  Since the onset of the “Great Recession” in the 4th quarter of 2007, GDP has risen by only 2.7%.  That’s an annual growth rate of only 0.4% – virtually no growth at all.

And here’s something else I find interesting.  Check this chart of the percent change in GDP since 2005:  Change in Real Per Capita GDP.  Notice that, since the recovery from the recession began in 2009, the frequency of negative quarters is increasing.  From the 3rd quarter of 2009 until the first quarter of 2011, six quarters passed before we had a negative quarter.  Then another six quarters passed before a 2nd negative quarter.  But, after that, there were only four quarters between negative quarters.  Most recently, there were only three quarters of positive growth before another negative quarter.

This recovery, fed by stimulus spending and $4.5 trillion in “quantitative easing” by the Federal Reserve – both of which have dried up – has run out of gas.  The economy is teetering on the brink of another recession.  It’s no surprise.  Nothing has been done to remedy the conditions that precipitated the last recession – our huge trade deficit and out-of-control immigration-fueled population growth.  In fact, it was falling exports that led the decline in per capita GDP in the first quarter.  Remember Obama’s pledge to double exports by 2015?  Never happened.  Not even close.

Contrary to the talk that you hear about a recovery that’s gathering momentum, or a slowdown that is only transitory, this economy is sick and is in serious trouble.  Its capacity for serving as a “host” to prop up the economies of badly overpopulated nations is practically depleted.  It’s now totally dependent on deficit spending and money-printing.  And equity markets have transitioned from vehicles for investing in the economy into a scheme for sopping up money from central banks.  Investors are playing a dangerous game of chicken with central banks when bad economic news is welcomed in the hopes of raising the odds of more money-printing.  Never have we entered a recession with interest rates already at zero and with a balance sheet that already has the Federal Reserve feeling queasy.  The ability of these economic gimmicks to mask the effects of overpopulation and a host-parasite trade regime has nearly run its course.  Watch out!


“How Many Are Enough?”

April 19, 2015

On our last night in Ireland, I watched a BBC broadcast about the upcoming election in Britain (to be held on May 7), which included interviews of both current prime minister (and Conservative Party leader) David Cameron and his challenger, Labour Party leader Ed Miliband.  One of the hot topics was immigration.  In general, the majority of Brits are completely fed up with the high rate of immigration there.

As a matter of background, with the exception of the tiny nations of The Netherlands and Belgium (both barely more than city-states), the U.K. is the most densely populated nation in Europe, with 683 people per square mile.  The U.K. is almost twice as densely populated as China.  And its population has grown by 8.4% since 2007 – all of it due to immigration.

As it did throughout the world, unemployment soared in Britain during the Great Recession, and it remains elevated today – at 7.2%.  And during times of high unemployment, workers – employed or not – take a dim view of immigrants being brought in to compete for their jobs.  We see the same thing here.  Discussions about immigration are always framed in the context of jobs and the demand for social safety net services.

It seems that Ed Miliband had taken David Cameron to task for his immigration policies.  But the BBC interviewer pointed out that the Labour Party’s immigration policies were just as liberal when they held power.  The interviewer asked Mr. Miliband whether he would actually cut the rate of immigration.  The answer was no.  I was stunned at the interviewer’s response.  He pointed out that the overcrowded U.K. was a nation of 64 million people, and asked, somewhat angrily, “how many are enough?”  “70 million?  75 million?”  His question was met with only a blank stare from Mr. Miliband.  There was no reply.

I never thought I’d live to see the day that a journalist would frame immigration in its proper context and ask how many people are enough.  But, apparently, when you reach the population density of the U.K., overcrowding becomes too much to bear and people begin to ask the question.  If people begin to ask the question, can an honest answer be far behind?  If one developed nation concludes that it has reached its limit, and acts on that conclusion, will it be long before other nations see the benefits of a stable or even shrinking population?  How will our journalists and politicians respond when Brits begin to say that “we wish we’d have done this much sooner?”

I have always maintained that the only effect of immigration – the ONLY effect – is to grow our population.  Immigrants possess no magic elixir for healing the economy.  Immigrants don’t create jobs.  They merely grow the population and the number of jobs grows as a result, though no one notes the fact that the result is proportionally fewer jobs.  Immigrants possess no skills that aren’t already found in abundance among our native population.  Thus, any discussion of immigration that doesn’t begin with its effect on population growth is a completely flawed analysis.

I know, I know, I’m reading too much into this one little interview.  It’s just nice to hear a voice of reason among all of the poppycock and balderdash (as the Brits might call it) that characterize discussions of immigration here in the states.

Back from Ireland

April 14, 2015

My wife  and I have just returned from a trip to Ireland, America’s worst trade partner in terms of their per capita trade surplus in manufactured goods, and I thought I’d share some observations.

First of all, perhaps because I visited areas more attractive to tourists (mostly in Kerry County), I didn’t really see much evidence of a large presence of American companies there.  However, shortly after arrival, as we were checking into our hotel just outside Dublin, an older gentleman who was dressed as a businessman somehow recognized me as an American and asked if I was there on business.  “No, we’re just here on vacation,” I replied.  “Oh, well there are a lot of American companies here, you know.” he said.  “Yeah, I know.” I replied.  If only he knew just how well I knew that fact and how I felt about it but, following an all-night flight and a harrowing drive through Dublin to the hotel (my first experience driving on the left in a right-hand-drive, manual transmission car), I didn’t have the energy to get into a discussion.

One morning at breakfast at our next hotel in Killarney, a young hotel employee (maybe thirty) who was busy bussing tables and restocking the breakfast buffet, struck up a conversation, asking what part of America we were from.  “Michigan,” we replied.  (I found it interesting that of all of the people we met who asked such a question, maybe only half knew where Michigan was located.  It was oddly comforting that Europeans can also be “geographically-challenged” in the same way that many Americans are criticized for being.)  Anyway, the thing that this young guy seemed most interested in was the current state of the job market in America.  He noted that things had been difficult there as Ireland struggled to emerge from the economic mess it landed in during the “Great Recession.”  (You may recall that Ireland was dubbed one of the “PIIGS” nations of Europe – Portugal, Ireland, Italy, Greece and Spain – who had racked up massive national debts and were now a drain on the Euro Zone economy.)

On another occasion, as we waited for a tour of the Muckross House in Killarney National Park, one of the ladies selling tickets bemoaned the fact that they were short on tour guides, thanks to government austerity measures.  I was beginning to understand that employment was still a significant concern in Ireland.  This seemed strange, given Ireland’s relatively huge trade surplus with the United States.

The longer we were there, I grew more accustomed to the charm of the Irish brogue.  But I also began to notice that, in many cases, the accent didn’t seem right.  I then began to realize just how many of the people we were speaking with weren’t Irish at all but immigrants, primarily from around Europe and some clearly from the Middle East.  Especially in the hotels, the staffs seemed to be dominated by immigrants.  At an ice cream shop, the young lady who waited on us was French.  When I asked if it was difficult to get a work permit in Ireland, she explained that as a citizen of the Euro zone, she had just as much right to work there as anyone.

Although Ireland is twice as densely populated as the U.S., it’s actually rather sparsely populated by European standards, where most of continental Europe is as densely populated as China.  Thus, it’s become a magnet for migration of Europeans looking for a better life in a less crowded land where, though unemployment is still a problem, it’s much better than in other places.  We talked with a lady who had recently moved to the Killarney area from England, a nation four times as densely populated as Ireland.  She was ecstatic to be there.

Ireland is a beautiful place that everyone should try to visit at some point.  The people are friendly and we never had a bad meal.  The countryside is beautiful, dominated by sheep pastures delineated by ancient stone walls and hedgerows.  But, as someone hypersensitive to the subject of overpopulation, I can see that Ireland is in a state of transition, and I fear that their culture will gradually fade into the boring sameness that increasingly characterizes our globalized world.

Speaking of England, on our last day in Ireland I was watching a BBC news broadcast in which some journalist was interviewing Ed Miliband, Labour Party candidate challenging David Cameron for British prime minister in the upcoming election.  I was shocked (pleasantly so) by a question that the interviewer put to Mr. Miliband.  But that’s a subject for my next post.



March employment signals economic slow-down

April 5, 2015

For the past few months I’ve complained that the government’s employment statistics weren’t reflecting reality.  They weren’t corroborated by other economic data and just seemed – well – trumped up.

It seems that reality has finally caught up with the Bureau of Labor Statistics (BLS), who yesterday released employment data for March that wasn’t just weak; it was downright bad.  Every aspect of the report was bad.  First of all, the headline number of 126,000 jobs created (from the establishment survey) was far below even the low end of estimates.  And the employment level (from the household survey) was much worse, rising by only 34,000 jobs.  The official unemployment rate held steady at 5.5%, but that was thanks only to the BLS’s “labor force vanishing act” trick of claiming that another 96,000 workers gave up looking for work.

And there was more bad news.  Those inflated January and February employment estimates were revised downward by 69,000 jobs.  And the average work week contracted by 0.1 hours, another sign of a weakening labor market.  Aside from gains in business services, health care and retail, all other sectors of the economy (including manufacturing and construction) were flat or actually declined.

You can’t blame the weather for these weak figures.   The weather was pretty benign for the last three weeks of March.  And the labor dispute that nearly shut down ports on the west coast?  That was resolved early in March.  The only real explanation (corroborated by other economic data) is that the economy is slowing noticeably.

At the beginning of this year, amid all the euphoria over a “booming” economy, I predicted that growth would slow and stall in 2015.  It’s starting to happen.  I also predicted that, contrary to nearly-unanimous expectations of a rate hike by the Federal Reserve in June, they would not raise interest rates at all this year.  This bad jobs report will surely put off any rate hike for at least a while longer.  My point is that when you understand the role of worsening overpopulation in eroding per capita consumption, you understand that an economy propped up by stimulus and monetary expansion isn’t sustainable, especially when those stimuli have been removed.