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get an average productivity growth rate of 2 1 for 1970 2016 and an average of 1 2 for 2006 2016 the one minus the other is 0 9 exactly the number we re looking for i put a new spreadsheet together formatted better with the info for each time period all in one column on the sheet i tested the sheet by duplicating my own previous results it was good i checked the productivity numbers too the sheet was good satisfied that the new worksheet is good i made a copy of the sheet and gave it different time periods to evaluate for the three time series i m looking at my data goes from 1948q1 to 2018q1 seventy years of data i figured i d look at ten year periods graph 1 gordon growth and productivity 10 year periods the blue dots show the gordon growth numbers by decade numbers comparable to robert gordon s 3 2 for the 1970 2006 period my dots for 1968 2008 are in that neighborhood gordon got 1 4 for the years 2006 2016 i get 1 5 same as i got before this time for the years 2008 2018 there is a general downward trend in the gordon growth number on my graph the red dots show productivity by decade there are high points at 1958 1968 and 1998 2008 these highs more or less agree with other histories of productivity that i have seen the numbers i have are 2 1 for robert gordon s 1970 2006 and 1 2 for his 2006 2016 the latter is a good match to my 2008 2018 here and the other looks about right as an average of the red dot values from 1968 to 2008 in the ballpark the green dots are blue minus red gordon growth less productivity growth to put it in the growth accounting framework green shows growth attributable to things other than labor productivity labor force size maybe maybe but i don t like to close doors if we attribute the green growth to labor force size there is nothing left over that i can point to and say it was caused by the growth of private debt and i have to have something i can point to and talk about debt to me breaking up 70 years into seven 10 year periods is much more informative than breaking it into two periods punctuated by a great recession so i thought maybe i d gain even more by breaking it into fourteen 5 year periods but all i gained was messiness graph 2 gordon growth and productivity 5 year periods first guess the blue dots now show the effects of recessions i count four definite low points 1953 1958 2 recessions 1978 1983 2 recessions 1988 1993 1 recession 2008 2013 1 great recession i remember reading that somebody kondratieff i think used 9 year periods to minimize the effects of recession on his data i can see that now the red dots still show early and late high points plus a smaller high in the 1980s the green is all up and down it s indecipherable but probably not closely tied to labor force size i want to go back to 10 year periods to minimize the effects of recession but this time i ll figure incremental overlapping ten year periods 1948q1 1958q1 then 1949q1 1959q1 then 1950q1 1960q1 and like that and instead of getting a dot for a ten year period i ll have points on a line where each point is the end of a ten year period i think that ll smooth out the picture even better than the first graph did here s the graph graph 3 gordon growth and productivity incremental 10 year periods first impression didn t smooth things out at all there s a lot of agitation in those lines way more than i expected remember consecutive points on the line are only a year apart see what i did here i put the legend off to the right rather than up top with the title with the legend off to the right the years of data are compressed into a smaller space the agitation would look less severe if the lines could stretch out into the space where the legend is but hey i m just showing you the graph as i first saw it with the legend at right and the lines compressed this data deserves to be compressed look at that green line it is up and down and up and down and up and down from start to finish you don t want to hide that agitation the red line provides a pretty good display of productivity i think with peaks early and late and listlessness between and the bright blue line gordon growth when i saw that line it reminded me of this graph from fernando martin of the st louis fed graph 4 from why does economic growth keep slowing down by fernando martin very similar to my blue line well i m almost out of things to say about gordon growth at least for now but first look again at the blue line on graph 3 that last little tic it shows from 2017 to 2018 is an uptick ooh ooh trump that was my first ball bustin thought it isn t though isn t trump the graph shows ten year averages the uptick from 2017q1 to 2018q1 is an uptick in 2008q1 2018q1 relative to 2007q1 2017q1 we see an uptick on graph 3 because the year 2017 was okay and the year 2007 was horrible it isn t trump here s fred graph 5 2007q1 to a still preliminary 2018q1 quarterly the same data i ve been using all the values from 2008q1 to 2017q1 are included in both of the last two points on my bright blue the difference between those last two points exists entirely because of the difference between the first few points and the last few points on this fred graph the change from 2007q1 where the graph starts is a jump up to over 2 5 then a slight fall then a bigger fall then a sharp drop into negative territory and the start of the great recession all in all a big downer the change from 2017q1 the bottom of the last v at the right is a jump up to over 2 5 then a slight increase then a slight fall then another slight fall as the line heads to a tentative 2 3 rate all in all fairly flat the difference in the last two bright blue points on my 3 is this the next to last point includes rgdp falling into recession the last point doesn t so the last point goes up i m trying to avoid tiresome detail here but people are going to be saying ooh ooh trump during the next couple years the bright blue line is going to go up and up significantly as time goes by and the great recession gradually drops out of the calculation so in the next few years if you hear anybody say the economy is great again and they hold up a graph of 10 year average growth well now you have evidence to shoot them down i for one still expect the economy to improve for a number of reasons but i expect to see it in current data not in ten year averages at may 10 2018 1 comment email this blogthis share to x share to facebook share to pinterest wednesday may 9 2018 acuppla things here s my graph based on robert gordon s description from sunday the unemployment rate sorted on the x axis real gdp growth on the y axis graph 1 data in each period sorted by unemployment rate here s the same data in chronological order graph 2 data in chronological order the jiggy lines are different now but the trend lines are unchanged as are the numbers in the trend line equations that s what i expected to see but i had to look next how does the graph look if i use the original unemployment values instead of rounding them to one decimal place like this graph 3 data not rounded compare this graph to graph 1 or for that matter you can compare the numbers in the trendline equations to those in graph 2 which has the same numbers as 1 with rounding omitted the numbers are different no noticeable change in the trend lines though it s not a big change i wonder remember at the end of sunday s post the average of my trend line values for 1970 2006 was 3 2 the same number robert gordon got but my average for 2006 2016 was a little off i got 1 5 he got 1 4 i wonder if that difference goes away when the rounding goes away nope i get 3 2 and 1 5 same as before at may 09 2018 no comments email this blogthis share to x share to facebook share to pinterest tuesday may 8 2018 notes on my gordon s way calcs yesterday i said i want to use robert gordon s method of evaluating economic conditions i m not doing it by throwing away all the data where there is no identical unemployment rate in both time periods the way i m doing it is by putting linear trend lines on scatterplots and compare the trends proofreading that looks like i should have said compar ing the trends also i realized that since i m not doing it by throwing data away i don t have to round the unemployment numbers to one decimal place next time no rounding as part of the process of creating my gordon scatter plots after i made subsets of the data for selected time periods i sorted them for each subset i sorted three columns unemployment rate rgdp growth rate and date on the unemployment column the sort puts my x axis values in sequence lowest to highest the way they would be if i was putting date values on that axis i didn t need the date column for the graph i needed it to improve my confidence in my work what happens if i don t sort the data i found out when i forgot to do the sort it looked like a cluster or spiral or something i knew right away when i saw it that i did something wrong and i fixed it right away i didn t stop to look at it so i want to graph the unsorted data again and look at it this time graph 1 unemployment rate x axis and rgdp growth rate y axis not a spiral maybe a scatter if you follow along the blue line from dot to dot you arrive at the dots in chronological order uh the dots are in chronological order not you but looking at it i get the impression that the dots are grouped with empty space between the groups look at the dot closest to the upper left corner there are no dots below it three dots off to the left maybe five to the right but there is a big space with no dots below that upper left one and look at the two highest dots the ones above the 15 0 level below each of them is a broad white strip with few scattered dots in it a little off to the left a little off to the right the dots are more tightly packed together odd isn t it maybe that s random unexpected groupings separated by unexpected empty space then i remembered that i rounded the values i ran into that problem before where the dots got packed into groups by the rounding i did the graph over right away using the original unrounded data graph 2 looks almost the same oh of course rounded to one decimal place i could have nine dots side by side between 4 0 and 5 0 on the x axis with the dots separated by gaps only about the size of a dot the grouping isn t from the rounding then you get these strange ideas like maybe there is some relation between unemployment and growth which favors certain places on the graph over other places nah but you have to think about those things you know because one of those ideas could lead to the light bulb that works at may 08 2018 no comments email this blogthis share to x share to facebook share to pinterest monday may 7 2018 using robert gordon s method since last we spoke i figured out how to use the slope and intercept functions in excel better late than never huh i want to use robert gordon s method of evaluating economic conditions the method we looked at yesterday i want to pick time periods that interest me this time and compare economic growth in those periods his way for quarters with identical unemployment rates i m not doing it by throwing away all the data where there is no identical unemployment rate in both time periods the way i m doing it is by putting linear trend lines on scatterplots and compare the trends like i did yesterday it s the method that makes sense to me i don t know how robert gordon did it but i figure he must have done it the same way as it is the only way to do it that i thought of anyway now i can calculate the slope and intercept values i don t have to make the graph and add the trend line and copy the values from the trend line equation that ll save a lot of work since we crawled out of the last recession for the longest time people were talking about how economic growth was so much slower than before julian brookes in rolling stone 2012 four years after the start of the great recession nobody would mistake u s economy for a thrumming engine of growth prosperity and human flourishing chris matthews in fortune 2014 gdp growth has been tepid since 2009 just 2 1 per year below the post war average and far below the average for previous recoveries james hamilton at econbrowser 2017 the bureau of economic analysis announced yesterday that u s real gdp grew at a 1 9 annual rate in the fourth quarter well below the historical average of 3 1 per year but close to the 2 1 average since the recovery from the great recession began in 2009 q3 now somehow slow growth has become normal i think it s a dangerous way of thinking to lie to ourselves like that hey i don t want to dwell on how bad things are i just want to understand the economy so i think we have to accept the facts for what they are does this mean we have to accept slow growth as normal no because that s a prediction predictions are not facts the fact is that the economy has been slower since 2009 than it was before now about that before time and the growth then it s more or less recognized that us rgdp is trend stationary marcus nunes told me with real growth averaging about 3 3 from the early 50s to 2007 at trading economics i read that gdp growth rate in the united states averaged 3 21 percent from 1947 until 2018 i know they want to simplify and have just one number and that can be useful but it s not useful if you want to see how growth trends have changed marcus s method is better he figures an average only thru 2007 there is data left over so we can figure an average for the more recent years then we can compare the two averages and see how growth trends have changed trading economics figures the average from a 1947 start that s what i would do it uses all of the commonly available quarterly data marcus figures the average from 1952 to avoid the post war adjustment that makes sense too what doesn t make sense to me is to lump all the years together and get one average value if there was a change somewhere in the middle scott sumner says growth in us living standards slowed after 1973 somewhere in the middle ross perot showed the same graph 1 source ross perot united we stand from when perot was running for president in 1992 so maybe we want to look at economic growth from 1947 to 1973 and from 1973 to 2007 and since 2007 three numbers three growth trends then we can look at all three and compare them that s the kind of thing that makes sense to me so i made a graph like the last one i did yesterday using robert gordon s method but showing the three growth trends graph 2 progressive decline in trend growth unemployment on the x axis rgdp growth on the y axis forget the thin jiggy lines forget all those dots focus on the three thick trend lines the highest one the blue one is for the years 1948 thru 1973 1947 got lost somewhere the red line is lower the economic growth is lower this line shows the trend for the years 1973 thru 2007 the green line is lower yet economic growth is lower yet thi...
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