What 10-year graph best sums up the aughts: Housing prices, global trade, China’s growth or US household borrowing? Economist Michael Mandel presents his four most important economic graphs of the decade. I offer one more.
1) The boom and bust in housing prices clearly
epitomizes the decade. What’s more, in 2000 nobody in their right mind
would have predicted that the boom lasted as long as it did. Downside:
The gyrations in the housing market may be a symptom of deeper
problems, much like a fever is a symptom rather than a disease in its
own right (The chart below is drawn from the Case-Shiller price
indexes)
2) Globalization has been one of the main themes of this decade-and nothing illustrates globalization more than the rise in exports as a share of global GDP.
In 1999, global exports were about 22.7% of global GDP, as measured by
the International Monetary Fund. By 2008, that number was 32. 3% before
plummeting in 2009. Downside: There may be systematic double-counting,
as companies break up production into smaller and smaller pieces.
3) Chinese economic growth would have been one of
the runner-ups for the Economic Statistics of the Decade for the 1990s.
Chinese economy growth averaged an astounding 10% peryear in that
decade, and looks like it’s going to get to the same level again in
this decade. Downside: No one is really sure whether to trust the
Chinese economic statistics or not.
4) Finally, we come to U.S. household borrowing, which
probably is the clearest reflection of the financial crisis. In this
decade the U.S. household sector amped up its borrowing from $500
billion in 1999 to $1.2 trillion in 2006, before dramatically cutting
debt in 2009. Downside: This number from the Federal Reserve includes
domestic hedge funds and nonprofit organizations, making it a bit tough
to interpret.
As for me, I wish he had included this graph below (also via Mandel) which nicely sums up America’s private sector problem. Our 10-year net growth in jobs is quite positive in health, education and government, but negative in everything else.
