October, 2011 Archives
by Riaan Nel in News
For all of those people who believe in the decline of the US as an economic superpower, the following comparison gives some perspective. There is no argument that the US is declining on a relative basis vis-à-vis the emerging world. However, the US will remain a dominant and important economy for many decades.
- California, it is often said, would be the world’s sixth- or seventh-largest economy if it was a separate country. Actually, that would be the eighth, according to this map, asFrance (with a GDP of $2,15 trillion) is #8 on the aforementioned list.
- Texas’ economy is significantly smaller, exactly half of California’s, as its GDP compares to that of Canada (#10, $1,08 trillion).
- Florida also does well, with its GDP comparable to Asian tiger South Korea’s (#13 at $786 billion).
- Illinois –Mexico (GDP #14 at $741 billion)
- New Jersey –Russia (GDP #15 at $733 billion)
- Ohio –Australia (GDP #16 at $645 billion)
- New York –Brazil (GDP #17 at $621 billion)
- Pennsylvania –Netherlands (GDP #18 at $613 billion)
- Georgia –Switzerland (GDP #19 at $387 billion)
- North Carolina –Sweden (GDP #20 at $371 billion)
- Massachusetts –Belgium (GDP #21 at $368 billion)
- Washington –Turkey (GDP #22 at $358 billion)
- Virginia –Austria (GDP #24 at $309 billion)
- Tennessee –Saudi Arabia (GDP #25 at $286 billion)
- Missouri –Poland (GDP #26 at $265 billion)
- Louisiana –Indonesia (GDP #27 at $264 billion)
- Minnesota –Norway (GDP #28 at $262 billion)
- Indiana –Denmark (GDP #29 at $256 billion)
- Connecticut –Greece (GDP #30 at $222 billion)
- Michigan –Argentina (GDP #31 at $210 billion)
- Nevada –Ireland (GDP #32 at $203 billion)
- Wisconsin –South Africa (GDP #33 at $200 billion)
- Arizona –Thailand (GDP #34 at $197 billion)
- Colorado –Finland (GDP #35 at $196 billion)
- Alabama –Iran (GDP #36 at $195 billion)
- Maryland –Hong Kong (#37 at $187 billion GDP)
- Kentucky –Portugal (GDP #38 at $177 billion)
- Iowa –Venezuela (GDP #39 at $148 billion)
- Kansas –Malaysia (GDP #40 at $132 billion)
- Arkansas –Pakistan (GDP #41 at $124 billion)
- Oregon –Israel (GDP #42 at $122 billion)
- South Carolina –Singapore (GDP #43 at $121 billion)
- Nebraska –Czech Republic (GDP #44 at $119 billion)
- New Mexico –Hungary (GDP #45 at $113 billion)
- Mississippi –Chile (GDP #48 at $100 billion)
- DC –New Zealand (#49 at $99 billion GDP)
- Oklahoma –Philippines (GDP #50 at $98 billion)
- West Virginia –Algeria (GDP #51 at $92 billion)
- Hawaii –Nigeria (GDP #53 at $83 billion)
- Idaho –Ukraine (GDP #54 at $81 billion)
- Delaware –Romania (#55 at $79 billion GDP)
- Utah –Peru (GDP #56 at $76 billion)
- New Hampshire –Bangladesh (GDP #57 at $69 billion)
- Maine –Morocco (GDP #59 at $57 billion)
- Rhode Island –Vietnam (GDP #61 at $48 billion)
- South Dakota –Croatia (GDP #66 at $37 billion)
- Montana –Tunisia (GDP #69 at $33 billion)
- North Dakota –Ecuador (GDP #70 at $32 billion)
- Alaska –Belarus (GDP #73 at $29 billion)
- Vermont –Dominican Republic (GDP #81 at $20 billion)
- Wyoming –Uzbekistan (GDP #101 at $11 billion)
by Riaan Nel in News
An event that received some press, but not much, was the Economic Cycle Research Institute’s prediction that the US economy was about to tip back into a technical recession (http://www.businesscycle.com/). There seems to be a split amongst economists, political economists and investment strategists on the question of a recession. A report by Bank of America-Merrill Lynch predicts a 40% chance of a recession. Blackrock attaches a 30% probability to a recession occurring. Dr. James Breech from Cougar Global Investments only thinks there is an 18% chance of a recession.
First of all, we have to understand that notwithstanding the pretence of being ‘scientific’, these percentages have a lot do to with art – in other words guessing. Second, the framework and underlying assumptions we use to make predictions color those predictions. Thirdly, try as we may, we as humans are fundamentally subjective, and although we have the ability to think rationally, so much of our rational thought is colored by subjectivity. For instance, recent phenomena have a disproportionate larger impact on our ‘rational’ predictions than phenomena in the more distant past.
So, philosophy and meta-theory aside, are we going to go into a recession? Who cares what the technical definition is, and if we are going to go “back” into one? It doesn’t really matter to the person unemployed for the last two years! The US economy’s growth since the recession formally ended has been so anemic that one could argue we never got out of the Great Recession. Whatever the future holds, a robust recovery is not in our future. What is in our future is stagnation, regardless if we classify it as a recession or not.