Observations on the US Economy – A Quick Look at the Data

Silicon Valley, California

Professor David Kleykamp

The Ten Topics of Interest to Most People

1. Economic Growth2. Unemployment3. Consumer Price Inflation4. Productivity Growth5. Wages6. Fiscal Deficits and National Debt7. Trade Balance8. Consumer Confidence 9. Housing Market10.Distribution of Income and Wealth

#1. Economic Growth

-- Slow to Average Growth since Late 2009 (about 2.5%) -- Low Growth from 2011-- Weak Recovery Means Unemployment Cannot be Reduced

Okun’s LawA Relation Between Economic Growth and Unemployment

We Need 2% – 2.5% Growth for One Year to Reduce Unemployment by 1%

#2. Unemployment Rate

Right Direction , But Moving Down Too Slowly Unemployment is Very Costly – Wasted Resources, Human Tragedy,

and Loss of Self-Esteem

People that Lose Their Jobs Will Turn to More Radical Answers if There are Few Choices – Just Like in Steinbeck’s book The Grapes of Wrath

#3. Consumer Price Inflation

Inflation is Less of an Economic Threat – Costs are Low and Predictable

Most Expectations are for 2.5% Inflation, but Clearly This Will Drop

Inflation is a Secret Tax on Your Holding of Money -- The Government Prints the Money and Makes Everyone Else’s Holdings of Money Less Valuable. Remember More of Something Reduces its Value, Always.

Print Too Much Money and Its Value Goes Down.

#4. Productivity GrowthNon-Farm Business Productivity Growth, Annualized

Productivity Growth is Pro-Cyclical, Weak and Unstable Growth Recently,

Some Seasonal Factors at Play

How Can Firms Raise the Average Productivity of their Workforce?

Investment, Training, Technology and Know-How, and Market Scale

#5. Wages

Wage Growth has Become Slower and Less Stable in Recent Years – Probably Due to Lower Inflation and Less Stable Growth in Productivity

Growth in Manufacturing Wages has been Very Low Recently

Although a Better Performance Appeared in 2012

#6. Federal Government Fiscal Deficits and National Debt

The US Fell Off the Fiscal Cliff Long Ago – It Just Hasn’t Hit the Ground Yet

The National Debt Now Stands at 100% of the GDP

The US has improved its export growth over the last few years

However, it is hard to pay back debts internationally-- if you can’t run trade surpluses or you don’t want to print money to

pay it back

#7. The Trade Balance

#8. Consumer Confidence

American Consumers Remain in a Mildly Blue Funk, but are Slowly Recovering

#9. The Housing Market

The Drop in New Housing Starts has Hit Bottom and is Recovering.But the Return to Normalcy is Slow and Painful

#10. The Distribution of Income and Wealth

Like Most Countries The US Saw Increased Inequality in the Distribution of Income From 1979 - 2007

Interesting Drop in Labor Compensation as a Percentage of National Income – Includes Benefit Packages

Thanks for Your Patience and Attention