Economy

Economic growth unexpectedly declined in the decade of the 2000s.  This may have been a normal cyclical variation or it may portend a future of slower economic growth.  The economy, economic growth and other economic issues will be the subject for future research and analysis for Crestmont Research. New postings and updates will be noted in the Recent Additions section of this website.

Economic Growth

Updated
Through 2012

charts: GDP - Real Economic Growth - by decade

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GDP – Real Economic Growth 

Economic output, as measured by real gross domestic product, reflects the amount of goods and services produced by labor and capital in an economy.  The change from period to period, excluding the effects of inflation, measures the real economic growth from the economy.  Economic growth has been relatively consistent over many decades in the U.S.  This is the result of fairly constant population growth and generally consistent productivity gains (at least in the longer-run).  During the decade of the 1930s, economic growth stalled; it then subsequently recovered its long-term average growth rate through an above-average decade in the 1940s.  Real GDP in the decade of the 2000s was significantly below average.  It is unclear whether the economy downshifted to a new level of slower growth, or whether pent-up economic production will drive a high-growth decade in the 2010s or beyond that again restores the long-term average.

Updated
Through 2012

chart & analysis: Economy Population by Decade

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GDP & Population Growth 

Economic growth, as measured by GDP, is driven by two components: population growth and labor productivity.  Population growth represents a surrogate measure of the quantity of labor in the economy.  Although there are numerous measures that are more refined (e.g., labor force participation, total employment, etc.), over time total population growth has provided a reasonable estimate for high-level analyses of the first component of economic growth.

Updated
Through 2012

charts & analysis: GDP Productivity by Decade

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GDP & Economic Productivity 

Economic growth, as measured by GDP, is driven by two components: population growth and labor productivity.  Labor productivity reflects the ability for increased output from the existing quantity of labor in the economy.  Various government agencies and independent analysts produce measures of labor productivity.  For high-level analyses of the second component of economic growth, a productivity measure using overall economic production provides the most comprehensive and consistent measurement of economic productivity.

General Economy

Updated
Through 2012

chart: Nominal GDP - 10-Year Rolling Components

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GDP – Nominal: 10-Year Rolling Components 

Nominal GDP consists of real GDP plus inflation.  This chart presents the two components of nominal GDP for all ten-year periods since 1900.  The ten-year periods smooth some of the variability of economic growth and the inflation rate to display the contributions of each component over longer periods.  Of particular note, the loss of real economic growth during the 1930s was made up in subsequent decades thereby restoring the long-term trend of fairly stable real economic growth over time.

Updated
Through 2012

chart: Nominal GDP and Earnings Per Share

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GDP – Nominal & EPS 

Nominal GDP and Earnings Per Share have a close and fundamental relationship.  Nominal GDP is driven by the economic cycle, with real GDP providing core growth and the inflation rate adding a degree of variability over time.  Earnings growth is driven by the business cycle, which revolves around the economic cycle with swings that have greater magnitude and frequency.  The primary driver for the core baseline of earnings over time is nominal economic growth.

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Books by Ed Easterling