Cheat Sheet Q&A: Economic growth historically vs. today
Hi Brian. With the most recent economic forecasts now showing that we're still probably stuck with low economic growth this year it got me to thinking. How fast does the economy usually grow? How does it compare to recent times?
This is a great question. I decided to grow through economic growth every year starting with 1980. Here are the highlights by decade:
Best year for growth: 1984 @ 7.3%
Worst year for growth: 1982 @ -1.9%
Average for the decade: 3.1% economic growth
Best year for growth: 1999 @ 4.8%
Worst year for growth: 1991 @ -.1%
Average for the decade: 3.2% economic growth
Best year for growth: 2000 @ 4.1%
Worst year for growth: 2009 @ -2.8%
Average for the decade: 1.4% economic growth
Best year for growth: 2012 @ 2.8%
Worst year for growth: 2014 (so far) @ -1%
Average for the decade: 1.6% economic growth
This information allows you to notice trends and understand why the economy has been so frustrating in recent years. You can see that in each decade we have a period of negative growth. You also can see why the 80’s & 90’s were periods of time of prosperity in this country with upward mobility, strong employment and income growth. You can also see why the 2000’s were a period of time that were difficult generally for many Americans when income growth began to wane and by the end of the decade a period of economic strife via the Great Recession. With the most recent decade we’re currently in you also can see why the conditions in this country don’t seem to have improved for the average person.
You’ll hear me say that the key to a meaningful economic recovery is a 3%+ growth economy sustained for a period of time. Now you see why. In a 3%+ growth economy you see meaningful job growth with income growth that follows. In a sub 2% growth economy sustained we get, well what we’ve been getting…
CNBC’s Top states for business 2014 - How Florida stands:
Bottom Line: CNBC provides the most comprehensive analysis of state by state business comparisons of any entity each year. They’re out with their state by state comparisons for 2014. The categories covered include: Cost of doing business, state economy, infrastructure, work force, quality of life, technology and innovation, business friendliness, education, cost of living & access to capital. Whew… That’s a lot right? So here are your top 5 for 2014:
· #5 North Carolina
· #4 Nebraska
· #3 Utah
· #2 Texas
· #1 Georgia
Yay to my home state for winning this year. So how did we fare in Florida? Well we made some pretty good progress but there is still significant room for improvement.
· Florida improved from #30 in 2013 to #20 in 2014
Here are the high:
· We rank #3 for qualified workforce & #7 for access to capital
And the lows:
· Cost of doing business Florida is at #37 & education ranks #38
The biggest improvement came from the improvement in our state economy which improved from #38 to #11 over last year.
For the complete breakout here is a direct link to CNBC’s findings: http://www.cnbc.com/id/101758236
Forget insurance - how much more health care itself costs in 2014 & first look at 2015:
Bottom Line: PricewaterhouseCoopers has studied the actual hard cost of like medical care today vs. a year ago. The news isn’t good.
· Medical care cost is up 6.5% year over year
And based on current pacing PWC is also estimating 2015 as well. That news is worse still…
· PWC estimates 2015 medical cost increase to be 6.8%
With income growth of just 2% this year, we’re continuing to see the hard cost of medical care rise at greater than 3x the rate of incomes. This assures that the cost of healthcare will continue down an unsustainable path and that your insurance cost will increase at a minimum of those levels for renewal. We’ve still done nothing to address the actual crisis with healthcare in this country – the root cost of it. Until and unless the cost increase mitigate – the problem will only exacerbate.
Service & Quality determine loyalty - not price - top consumer brands by category:
Bottom Line: The two reasons under which we shop where we shop generally speaking come down to the same two reasons for all consumers regardless of socio-economic status. They are price and convenience. The only difference is the priority of the two. Those of greater means seek convenience first and price second. The inverse is true of those of lesser means. But that doesn’t account for brand loyalty. Gallup recently studied brand loyalty and found these companies to have the top brand loyalty in their categories:
Traditional retail: Nordstrom
Food Service: Starbucks
Consumer products: Apple
So what does that tell you? Those are all premium brands with premium products and service. Wal-Mart is the largest retailer and McDonalds sells more food than any other food service company. When it comes to brand loyalty you see that the companies are all premium quality products and brands with generally high quality service. So combine all four characteristics…
New house leader - elect takes his first meaningful stand & you'll likely agree - regardless of your affiliation:
Bottom Line: Kevin McCarthy is the new House Majority leader-elect. Before he’s even officially taken over the position of House Majority leader, he already seems to be the new face & voice of House leadership (notice how the Speaker, John Boehner, has be silent since the Cantor loss). He also has taken his first policy stand with his elevated status. You’ll probably like it regardless of your political leanings.
McCarthy is saying that he firmly opposes raising the Federal gas tax. He said it won’t pass the House of Representatives this year. This is of course in response to the Senate proposal to raise the Federal gas tax by 12 cents this year.