The US Bureau of Economic Analysis released overnight some revised GDP estimates, not just affecting the last couple of quarters (the bits that tend to attract more headlines than they are worth), but going back several years. The overall effect was to revise lower estimates of US GDP growth over the last few years. The previous estimates of growth had, of course, already been very low by historical standards.
I’ve been intrigued, and have posted previously, about how similar the paths of NZ and US GDP per capita have been since 2007, despite all the differences between the two countries’ experiences (financial crisis and not, terms of trade boom and not, earthquake reconstruction and not, and even quite different labour market experiences). So I was curious to check what the chart – showing real GDP per capita – looked like following the latest US revisions.
Statistics New Zealand publishes separate production and expenditure GDP series, and not infrequently there are material divergences between recent years’ estimates of the two series. SInce 2007, on current estimates, GDP(E) has grown more than 2 per cent more (in total) than GDP(P). Analysts tend to pay more attention to the production measure (GDP(P), but that is partly for historical reasons (it used to be less volatile). The differences will largely be revised away over time, but we have no obvious way on knowing now which will better be seen as representing history. The final revisions, years hence, could be higher or lower than both series, or somewhere in the middle. My hunch is that they will be a bit lower: I understand that SNZ uses PLT met migration to feed into its population estimates, but experience suggests that in periods of strong inward migration net PLT understates the actual net inflow. The next census – the check on the level of population – is still a few years away.
If the GDP(E) line, as it currently stands, were to prove to be the final story, we might end up taking a little comfort that we had done a little better than the US over this period. As it is, for now I’m sticking with emphasising the cumulative similarities in GDP per capita paths rather than the differences. And if we had crept a little ahead in the last year or two, the chances of maintaining that lead don’t look overly good right now.
And don’t forget the employment (or productivity) picture. We are estimated to have generated very slightly more income per capita growth since 2007, but employment here dropped from 65.9 per cent to 65.0 per cent of the population from 2007 to 2014. In the US employment dropped from 63 to 59 per cent of the population over the same period. For good or ill, it took them less of their population to generate much the same per capita output gains. That represents much more productivity growth than we’ve seen here.