Econ 4.0? What it all means...

posted by Brian Mudd - 

Econ 4.0? What it all means... 

Bottom Line: With the GDP report potentially about to show not 2%, 3%, but 4%! Growth the question is what does it all mean? During and for the first few years after the Great Recession I spent a fair amount of time talking about the implications of economic growth in simplistic terms that told the story of what it means to you. Here's a quick breakdown: 

  • 1%: An economy that's at imminent risk of recession and doesn't create enough jobs to support population growth  

  • 2%: The status-quo economy. Creates just enough new opportunity to make slow employment progress but generally not enough to spur wage growth 

  • 3%: An economy that creates more jobs than population growth produces demand for them, produces meaningful wage growth 

The secret of the success of the United States is that our growth rate has averaged 3.1% for its history. That's why despite recessions, wars and tumult every generation has always fared better than the one before it and it's how the US economy became the largest in the world in under 150 years. The issue for the current generation of young adults is that our country hadn't been delivering on its promise or potential. The last calendar year we had average growth was 2005. After delivering economic growth of 2.8% last year, best since 2005, what today's report is showing is that the US is back, and you've already been feeling it.  

  • Stock market has hit all-time highs  

  • Retirement account balances are at all-time highs 

  • Corporate profits are at all-time highs 

  • Net take home pay has increased by the most year over year in 32 years 

  • Record low minority unemployment rates 

  • Record low unemployment rate for women 

That's what the US economy getting its groove back means to you. 

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