Graph 1: real (adjusted for inflation) Gross Domestic Product (blue), real National Debt (red), and real Gross Domestic Profit (green):

<embed src = "http://i39.tinypic.com/eb5vug.jpg">

Graph 2: Federal Interest Rate (red) versus the rate of Unemployment (blue)

<embed src = "http://i41.tinypic.com/1jthtj.jpg">

Graph 3: nominal (not adjusted for inflation) Gross Domestic Product (red), nominal National Debt (green), and Consumer Price Index (blue)

<embed src = "http://i43.tinypic.com/20j0nd1.jpg">

Graph 4: Imports (red) and Exports (green) versus Trade Surplus/Deficit (blue)

<embed src = "http://i44.tinypic.com/jzi70j.jpg">

Graph 5: Federal Interest Rate versus Inflation Rate

<embed src = "http://i44.tinypic.com/2j1wf3d.jpg">

Graph 6: nominal Mean Income (orange) and real Mean Income (green) versus nominal Median Income (red) and real Median Income (blue)

<embed src = "http://i44.tinypic.com/2mct8y9.jpg">

Graph 7: real (adjusted for inflation) Gross Domestic Product (red) versus Consumer Price Index (blue)

<embed src = "http://i42.tinypic.com/2cr8wuc.jpg">

Graph 8: Trade figures, adjusted for inflation and not adjusted for Inflation

<embed src = "http://i40.tinypic.com/2hq81hd.jpg">



Let me know if there are any particular metrics you would like to see plotted versus each other, and I can generate an overlay. Also if there are other economics indicators you would like to see included, or have links to tabular data, feel free to contribute links or suggestions.

*quality I missed this

Awarding imstellar28 with one star point for this contribution to Sift Talk - declared quality by joedirt.

<embed width="440" height="400" src="http://z.about.com/d/uspolitics/1/0/I/1/debt_percent_gdp.png">

Looking at Graph 1,

You can see that between 1970 and 1990 the GDP has almost doubled, climbing from $2.7 trillion to $4.4 trillion, which is in agreement with what Farhad2000 was claiming in another thread. Looking at red curve we see that National Debt is pretty constant until about 1980, when it takes off at a similar rate as the GDP.

Thus, from 1980 onward, the national profit (green curve) remained relatively flat. If we think of the US as a business, the GDP represents revenue, the National Debt Operating Expenses, and the difference between the two profit. In effect, Graph 1 is a measure of how "in the black" we are. I'll admit, I was expecting the green curve to be negative after 1976, but it turns out the US, from the figures shown here, has actually pulled in a $2 trillion profit every year since 1980. If we include entitlements, that would probably change, but I do not have that data at this time.

If we judge the economy by the green curve (profit) as we do businesses, there was a huge boom between 1950-1970 where the profit margin rose dramatically--from around $100 billion to $2.2 trillion in only 20 years--a After that, it become relatively stagnant, as profit has not increased significantly the past 39 years, save for the period between 1995-2000.

^imstellar28: I think the event that happened around 1970 was that the US dollar was no longer tethered to the gold standard. I believe the apparent jump in the country's GDP may also have devalued the currency significantly.

* *
Here's some info from a comment I made on this video. I had come across a site that estimated what the value of money is and was, and how that has changed over the years and played with it's currency value calculator. Seems to be relevant.


In 1900, $100.00 from 2006 is worth:
$4.04 using the Consumer Price Index
$4.71 using the GDP deflator
$1.51 using the value of consumer bundle
$0.88 using the unskilled wage
$0.61 using the nominal GDP per capita
$0.16 using the relative share of GDP
In 2006 $100.00 from 1900 is worth:
$2,476.66 using the Consumer Price Index
$2,124.46 using the GDP deflator
$6,602.73 using the value of consumer bundle
$11,412.86 using the unskilled wage
$16,316.15 using the nominal GDP per capita
$64,073.94 using the relative share of GDP
In just over 100 years, the dollar has lost between 96 and 99.8 percent of its value, depending on how you measure. Meaning that a penny in 1900 more then likely worth more then a dollar today.
The source I used does not measure the last two years, as the most recent data is not yet all finalized. I can only imagine what 2007 and 2008 have done to the value of money.
As a share of the U.S. GDP, I could happily live on $100 per year of 1900's money.

Looking at Graph 6,

You can see that the economic stagnation after 1980 shown in Graph 1 really hit home: the inflation adjusted median incomes (blue curve) for individuals in the US were virtually unchanged between 1980-2006, hovering around $29,000.

However, in 1950 the real median income was only $6,000 a year, yet by 1973 the median income had increased to almost $28,000 a year. This can be seen as a measure of the standard of living for the typical American, and it increased almost 400% in two decades alone.

If you compare this to the the average income (orange curve), you can see that there was some slight growth between 1980 and 2006, from around $33,000 to $39,000. In addition, the gap between median and mean increased between 1980-2006. This demonstrates that the distribution of income is positively skewed: there are much fewer people earning higher income than those earning lower incomes, and those earning higher incomes were able to grow their income even more in the period 1980-2006.

notarobot,

I think Graph 3, the curve Consumer Price Index (blue) supports your theory about the break from the Gold standard. The CPI is rising slowly prior to 1976, and very sharply thereafter. The Consumer Price Index is a measure of the average cost of common items, and is used to calculate Inflation. This curve also reiterates your calculations about the price of money between 1900 and 2006. I only have the data plotted from 1950 onward, but looking at the 1950 value you can see that the CPI is about 24, while in 2009 it is about 211.

The rate of inflation is calculated as ((B - A)/A)*100. Where B and A are values of the CPI for two different time periods.

In effect, this says that if you could buy a gallon of milk for 30 cents in 1950, that same gallon of milk would cost you $2.63 in 2009. If you had instead saved that 30 cents over the years, it would only buy you 15 oz of milk.

It's a shame to see the median income has dropped so low bellow the mean.
I'm guessing it will be even more shocking in a year when we see the 2009 national debt and inflation rate. The rate at which we have been printing money this year makes Al Gore's "hockey stick" look like a tooth pick. Not to mention the other trillions that the new administration and the Dem congress want to dish out.

.

imstellar, in the first chart, how are you defining Gross National Profit? Is it GDP - National Debt? Is National Debt only Government debt, or aggregate public/privately held debt? If the former, can we see the latter?

In the second chart, which unemployment statistic are you using? The Fed's U3, or U6? If it's the former, I'd love to see interest rate vs. U6 unemployment.

joedirt already provided a chart of the National (Government) Debt-to-GDP ratio from a source I've quoted a few times. Do the official stats back it up? I think they will, but it's still good to make sure we're working on a common set of data.

As far as more charts for the type of discussions we usually get into, I'd also like to see:

• Taxes collected as a % of GDP vs. % growth rate of the GDP vs. % growth rate of GNP.
  
• Top marginal tax rate % vs. the % difference between mean and median income.
  
• Government spending as a % of GDP vs. Non-government spending as % of GDP vs. U6 unemployment
  
• Government budget deficits as a % of GDP over time
  
• The price of oil, both nominal and adjusted for inflation (just for kicks)
  
• The Dow Jones Industrial Average over time, both nominal and adjusted for inflation (S&P too, if it's different in any meaningful way)

^NetRunner,

The Gross National Profit is indeed the GDP - National Debt. The National Debt is the aggregate publicly held debt I believe. Here is the link where I got it for some more info: http://www.treasurydirect.gov/govt/reports/pd/mspd/mspd.htm. I do not have the figures for private debt or entitlements but would like to add those if possible.

I can plot the National Debt as a % of the GDP which will produce the same graph as the one posted by joedirt. Looking at Graph 1 you can see they are in rough agreement as they kind of tell the same story just in different figures: the profit margin was rising between 1950-1980 and 1995-2000, and was decreasingly slightly from 1980-1995 and 2000-2009.

I'm not sure about the unemployment data as it wasn't labeled either U3 or U6. The government really doesn't make this data very easy to find or use. The data I got was just off the BLS page, and I am guessing it is U3 as it wasn't called the broader unemployment rate.

As far as new data requests:

1. Taxes collected as a % of GDP vs. % growth rate of the GDP vs. % growth rate of GNP.
GNP is practically identical to the GDP so I didn't bother plotting it. However I will plot the Federal Receipts (taxes collected) versus GDP as I already have that data.

2. Top marginal tax rate % vs. the % difference between mean and median income.
Good Idea, I'll scrounge up the top marginal tax rate unless you already have a link to data.

3. Government spending as a % of GDP vs. Non-government spending as % of GDP vs. U6 unemployment
I started adding this data on friday, pretty scary!

4. Government budget deficits as a % of GDP over time
Is this the plot linked by joedirt of National debt / GDP or do you want the (Federal Outlays - Federal Receipts) / GDP?

5. The price of oil, both nominal and adjusted for inflation (just for kicks)
Just gotta scrounge up the data tables.

6. The Dow Jones Industrial Average over time, both nominal and adjusted for inflation (S&P too, if it's different in any meaningful way).
I was going to add this, but didn't because I think the current practice of associating the stock market with the economy is very simplistic. Still as you have requested it I will add it.

Good suggestions. I'll get the plots added in the next couple days.

If you look at Graph 7,

I interpret this graph as being the amount of real growth in the GDP, where the amount of real growth is measured as the difference between the red curve and the blue curve. From 1955-1982 the GDP was separated from the rate of inflation, indicating that real growth was occurring. This fact is reinforced by Graph 1. The latter periods, especially during 1990-1995, where the two are practically identical indicates to me that there was no real growth--incomes were merely increasing according to inflation. Graph 3 shows this as well, although not as precisely as Graph 7.

>> ^Doc_M:
It's a shame to see the median income has dropped so low bellow the mean.
I'm guessing it will be even more shocking in a year when we see the 2009 national debt and inflation rate. The rate at which we have been printing money this year makes Al Gore's "hockey stick" look like a tooth pick. Not to mention the other trillions that the new administration and the Dem congress want to dish out.


Not to pick on you, DocM, but your comment (and the fact that it's gotten several upvotes), is a prime example of how I think most conservatives misunderstand the relationship of various aspects of our economy.

First, you make a comment about median incomes dropping so far below the mean. As a liberal/progressive, I think after unemployment, that's one of the largest issues with our economy today.

Second, you say you think that issue will be somehow directly affected by the national debt and inflation rate (with the implication that those two things also have direct correlation to each other).

Third, you blame Democrats, and not the Fed, for the increase in the money supply, and presumably the inflation rate and national debt too.

The charts already on display should dispel all of these assertions, but somehow, they haven't.

If you look at real national debt, you will see that the curve had a brief slope downward during the Clinton years. CPI during that time continued to rise. National Debt and inflation do not have a causal relationship, nor do Democrats and National Debt, if you look at joedirt's chart.

Now, Fed interest rates and inflation rates have a high correlation, though that's not a perfect fit, either. I don't think we have a chart that shows us inflation vs. income disparity, but I'd love to see that, along with top marginal tax rates, and see which has a higher degree of correlation, because I think income disparity has more to do with tax rates than inflation.

Lastly, there is actually a reason why Democrats (and the Fed) are dishing out trillions. Notice how the CPI has a hook downward? That's deflation, and the last time we had that was during the Great Depression. So Ben Bernanke, being a student of Milton Friedman, is pumping out massive amounts of cash to try to prevent a deflationary cycle from taking root. Unfortunately, Fed rates have been at zero for a while now, and it can't get any lower, which brings us to fiscal stimulus, like what Obama got passed.

Now, imstellar subscribes to a theory of economics that essentially says deflation is a good and natural thing. That's fine. I disagree, but at least there are plenty of people smarter than both he and I who take up opposing sides of that debate.

Most conservatives though, have never heard of Austrian Economics, and certainly can't explain why they disagree with most mainstream economists about what to do right now. They're operating on a much simpler philosophy: say anything to encourage people to think everything bad happens because of (Democratic) government.

Lots of people repeat ludicrously nonsensical economic "policy" on that foundation alone, and do things like relentlessly point at the green line in Chart #3 and say "see, our debt is insane!" When the real issue is the size of the gap between the Red and Green lines on that chart, not the height of the Green line itself. Then they mix in inflation, not understanding that inflation actually helps keep our debt under control to some degree, since the dollars we owe are fixed, but the value of the dollars we use to pay off the debt are worth less as time goes on.

They also seem to propose, with just as much vigor, that what government needs to do is slash taxes, without remembering their momentary concern over debt. They also seem to think cutting government spending in a recession will help speed the recovery, not deepen the decline (ditto for letting banks and auto manufacturers collapse spectacularly). They also fail to see that a contracting economy can create a government deficit all on its own, since tax revenues fall as unemployment rises and mean income falls, and dismiss the proposition that government spending to get us out of a recession is likely better for the debt in the long run.

So in the end, we end up fighting about the same tired bromides about the size of government, rather than noticing that income disparity has been growing steadily despite an overwhelmingly conservative swing in our government's policy for the last 30+ years.

But people go on merrily slitting their own economic throats by demonizing Democrats as "big spending liberals" or more recently "socialists", not realizing that we're the ones that want to cut your taxes, and make government serve the people and not just the top 1% of income earners, and make fixing income disparity a top issue.

I'm not really surprised by that, but I'm constantly fascinated at how many knots people have to twist themselves in to defend the Republican party line.

Graph 2 shows the power of the federal reserve, it appears as if they are almost single-handedly controlling the rate of employment in the United States. If you look at the curves, there is a clear offset between the two, with the federal reserve leading by approximately 2-5 years. That is, increases or decreases in the federal funds rate are seen as increases or decreases in the rate of employment 2-5 years in the future. Now, whether this is causal cannot be established simply by looking at these two curves, but the trend is very convincing in light of the role of the federal funds rate.

Graph 5 also demonstrates a clear trend between the federal funds rate and the rate of inflation. When the rate drops, inflation drops, when the rate rises, inflation rises. You can also see that after 1976, the two have become detached to some extent, although the trend remains. Again this alone does not demonstrate causality, but it is a very strong trend. Given that the federal funds rate directly impacts the creation of new money, which impacts inflation, there is reason to believe that this is in fact a casual relationship.

So these two graphs indicate that there are very strong trends between the federal funds rate and those of unemployment and inflation. These two rates are extremely important as the former affects whether we are in a recession, and the latter affects how much our money is worth. One agency, made up of a small board has the power to change the federal funds rate. It should be noted that as far as I understand, the federal reserve board operates outside of the influence of democrats or republicans: it has its own agenda.

NetRunner,

In response to :
"Lastly, there is actually a reason why Democrats (and the Fed) are dishing out trillions. Notice how the CPI has a hook downward? That's deflation, and the last time we had that was during the Great Depression."

To be fair, deflation and inflation are opposite sides of the same coin. Is there any reason to fear a deflationary cycle any more than an inflationary one? If you look at Graph 3, the plot of CPI from 1950-2009, which feature sticks out more, the slight downward slope over the last year, or the giant upward curve over the last 59? Why are you focusing on a change from 220 to 210 (-4.5%) in one year when there was a change from 160 to 220 (+50%) in only 7 years?

One reason I posted this data is because unlike personal opinions, data should extend beyond all party and ideological lines. In interpreting it as a group, we should all be able to find common ground.

The "science" of economics is almost as realistic as the science of football, or the science of baseball, or the science of tennis.

It's not a science based on natural laws or phenomena, it's an exhasting, dynamic study of a predominant set of rules that most people have agreed to play by in a given region.

I've said it before and I'll say it again: we're long overdue for a new set of rules.

"Science is the effort to discover and increase human understanding of how physical reality works. Its purview is the portion of reality which is independent of religious, political, cultural, or philosophical outlook." (Wikipedia)

Economics is nothing if it is not political and cultural.

A person can make a science out of studying the way a Monopoly game is played, but almost every "discovery" made in that research will apply exclusively to the game of Monopoly.

It will not transfer to the Game of Life, or Sorry, or draw poker.

In the real world we have labor, capital, and a problem to solve or an objective to reach.

Capitalism, socialism, and communism are merely varying methods of using labor and capital to solve those problems or reach those objectives.

The "science" that you are purporting to share here is merely a study of one of those methods, capitalism, and an explanation of the peculiarities inherent in its rulebook.

For the sake of our world and humanity, it's time we found and established a new set of rules.

Nice work Imstellar.

I do recommend everyone read "Numbers racket: Why the economy is worse than we know" By Kevin P. Phillips, an article exploring the gradual corruption of economic indicators in the US economy. http://www.harpers.org/archive/2008/05/0082023

Extract follows:

The truth, though it would not exactly set Americans free, would at least open a window to wider economic and political understanding. Readers should ask themselves how much angrier the electorate might be if the media, over the past five years, had been citing 8 percent unemployment (instead of 5 percent), 5 percent inflation (instead of 2 percent), and average annual growth in the 1 percent range (instead of the 3–4 percent range). We might ponder as well who profits from a low-growth U.S. economy hidden under statistical camouflage. Might it be Washington politicos and affluent elites, anxious to mislead voters, coddle the financial markets, and tamp down expensive cost-of-living increases for wages and pensions?

Let me stipulate: the deception arose gradually, at no stage stemming from any concerted or cynical scheme. There was no grand conspiracy, just accumulating opportunisms. As we will see, the political blame for the slow, piecemeal distortion is bipartisan—both Democratic and Republican administrations had a hand in the abetting of political dishonesty, reckless debt, and a casino-like financial sector. To see how, we must revisit forty years of economic and statistical dissembling.

^Farhad2000,

I hate to call conspiracy, but there is a lot of opportunism in the government. These figures are reported by they very group that depends on them the most (our government). I think the article does a good job of detailing how numbers can and are manipulated for personal gain. I can imagine that however bad these figures look (like Graph 1), they would look much worse if collected by independent nonprofit groups.

Here are some of the requested plots (sans the national debt as a % of GDP, it got corrupted when I uploaded it, I'll have to add it tomorrow -- but it looks exactly like the image joedirt posted)

Graph 9: Dow Jones Industrial Average at closing time, adjusted for inflation (red) and not adjusted for inflation (blue)

<embed src="http://i44.tinypic.com/2cnk49k.jpg">

Graph 10: Dow Jones Industrial Average at closing time, adjusted for inflation (red) versus the rate of Inflation (blue)

<embed src="http://i43.tinypic.com/29bc27o.jpg">

Graph 11: Dow Jones Industrial Average at closing time, adjusted for inflation (red) versus the real Gross Domestic Profit (GDP - debt) (blue) on a LOG scale

<embed src="http://i42.tinypic.com/2psm1rc.jpg">

Graph 12: Dow Jones Industrial Average at closing time, adjusted for inflation (red) versus the rate of Unemployment (blue)

<embed src="http://i41.tinypic.com/2pqjjb5.jpg">

Graph 13: Top Marginal Tax Rate (red) versus the percent difference between Mean and Median Income (blue)

<embed src="http://i39.tinypic.com/24l2cs6.jpg">

Here is the same graph joedirt posted, plotted from my dataset.

Graph 14: National Debt as a percent of GDP
<embed src ="http://i40.tinypic.com/2qsnorc.jpg">

>> ^rougy:
"Science is the effort to discover and increase human understanding of how physical reality works. Its purview is the portion of reality which is independent of religious, political, cultural, or philosophical outlook." (Wikipedia)
Economics is nothing if it is not political and cultural.
A person can make a science out of studying the way a Monopoly game is played, but almost every "discovery" made in that research will apply exclusively to the game of Monopoly.
It will not transfer to the Game of Life, or Sorry, or draw poker.
In the real world we have labor, capital, and a problem to solve or an objective to reach.
Capitalism, socialism, and communism are merely varying methods of using labor and capital to solve those problems or reach those objectives.
The "science" that you are purporting to share here is merely a study of one of those methods, capitalism, and an explanation of the peculiarities inherent in its rulebook.
For the sake of our world and humanity, it's time we found and established a new set of rules.


quoted because it's awesome. economics ≠ science

The number of people who have jobs, how much they make on average, the change in prices over time, how much the government taxes or spends; these are all objective, scientific measurements that occur independent of capitalism, socialism, or any other political, economic, or cultural system.

"Economics is the social science that studies the production, distribution, and consumption of goods and services."

"The social sciences comprise academic disciplines concerned with the study of the social life of human groups and individuals including anthropology, communication studies, economics, human geography, history, political science, psychology and sociology."

"science refers to a system of acquiring knowledge based on scientific method, as well as to the organized body of knowledge gained through such research."

If you wish to re-define English words, then that is your prerogative, but it serves no purpose in this thread.