Marcus: "The point is that in the 1987-2007 period average real growth was around 3.2%, which had been in place since the early 1960s."
|RGDP (% change from year ago) 1960-01-01 thru 2007-12-31|
Click Graph for FRED Source Page
I downloaded the quarterly data from FRED for the above graph.
Marcus refers to "average real growth" so I am looking at the "Percent Change from Year Ago" numbers from FRED, and just averaging them for various periods. Not trying to figure compound growth rates or anything like that.
First data point: 1960-01-01. Last data point: 2007-10-01.
Full period average of growth rate values: 3.34%
Average for the period 1960-01-01 thru 1986-10-01: 3.59%
Average for the period 1987-01-01 thru 2007-10-01: 3.02%
For each data point, I figured the average real growth rate for the period since 1960-01-01. These values start above 5% -- a fluke, as the first value happens to be above 5% -- fall below 1.8% in 1961, then rise above 3% in 1962.
The average rises above 4% in 1964 and remains continuously above 4.0% until 1974, except for two quarters, when the average fell as low as 3.99540%.
After 1974 the average real growth number never again rises above 4%.
Taking a similar average using Marcus's 1987 start-date, the highest average growth achieved was 3.58430%
If Marcus wants to say that the high growth in the early years is inflation-related, that's fine*. But he can't say growth was just as good since 1987 as before.
I counted the number of quarters when the "average to date" value was greater than the highest average growth number (3.58430%) for Marcus's 1987 start-date.
Figuring the average from 1960, 85 of the 108 values (from 1960-01-01 thru 1986-10-01) or 78.7% were above the 1987-2007 maximum.
Again figuring the average from 1960, 8 of the 84 values (from 1987-01-01 thru 2007-10-01) or 9.52% were above the 1987-2007 maximum.
Figuring the average from 1987, of course, none of the 84 values were above the 1987-2007 maximum.
I just don't see how Marcus can repeatedly insist that it's all the same. I don't see how he can claim economic growth was just as good after 1987 as before. (And I'm not looking at years since the financial crisis, when growth got even worse.)
I think Marcus makes the argument he needs to make in order to justify the story he wants to tell. And I think it's bogus. Sorry, Marcus.
Link: Download the Excel spreadsheet where I did my work. Check my numbers. Or browse the Google Docs version.
* Related post: Lacker (2): Bullard. Marcus's own graph shows exceptionally good economic growth during the inflationary time. And the graph shows real growth -- growth with inflation stripped away.
Proofreading the post at two in the morning... Doublechecking the quote from Marcus Nunes... Turns out Marcus does have a story to tell! Good luck with the book, sir. But fix that growth thing, would ya?