Thursday, January 7, 2010

Lost Decade?

I keep hearing reports that the 'naughts' have been a lost decade. Setting aside for a moment that ten years is an arbitrarily chosen length of time, with arbitrarily chosen starting points, I still can't really see a good justification for such a judgement. Have we really made no progress for ten years? Are we really no wealthier?

The blue area is the 'lost decade'. The boom and bust are clearly visible, however, by the measure of this graph we have continued to increase not just our wealth, but the rate of growth of our wealth throughout the past decade (notice how the trend line is bending upwards). But, let's cancel out the effects of population growth just to make sure.

OK, so the rate of growth of wealth on a per capita basis isn't increasing as much a it might have seemed from the previous graph, but wealth per capita is definitely going up. Lost decade? I just don't see it here.

In fairness, my numbers only go through July of 2009, so the graph might dip a bit more at the very end, but I haven't heard any news that the past 6 months have dramatically worse than the year prior, so we should still be in the general vicinity of the trend line.

This last graph shows again that the past ten years don't look remarkably different from any 10 year period since the 1950s. Substantial volatility in the per capita growth rate, but generally positive. Here's the source for my data for all three graphs.

Maybe these are not the right measures, or maybe there's something deceptive about these graphs. If so, please help me to understand why the past ten years have been a lost decade.

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