CMP Associates Regulation Blog: US GDP Growing at 2.1 SAAR in IIIQ2021 in Continuing Recovery In the Global Recession, with Output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the Lockdown of Economic activity in the COVID-19 Event and the Through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), Mediocre Cyclical United States Economic Growth in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Real Private Fixed Investment, Swelling Undistributed Corporate Profits, United States Terms of International Trade, World Inflation Waves, United States Housing, United States House Prices, Financial Instability with Omicron Covid-19 Variant, Stagflation Risk, and Government Intervention in Globalization: Part I

US GDP Growing at 2.1 SAAR in IIIQ2021 in Continuing Recovery In the Global Recession, with Output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the Lockdown of Economic activity in the COVID-19 Event and the Through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), Mediocre Cyclical United States Economic Growth in the Lost Economic Cycle of the Global Recession with Economic Growth Underperforming Below Trend Worldwide, Real Private Fixed Investment, Swelling Undistributed Corporate Profits, United States Terms of International Trade, World Inflation Waves, United States Housing, United States House Prices, Financial Instability with Omicron Covid-19 Variant, Stagflation Risk, and Government Intervention in Globalization

Carlos M. Pelaez

IA Mediocre Cyclical United States Economic Growth

IA1 Stagnating Real Private Fixed Investment

IA2 Swelling Undistributed Corporate Profits

IID United States Terms of International Trade

I World Inflation Waves

IA Appendix: Transmission of Unconventional Monetary Policy

IB1 Theory

IB2 Policy

IB3 Evidence

IB4 Unwinding Strategy

IC United States Inflation

IC Long-term US Inflation

ID Current US Inflation

IE Theory and Reality of Economic History, Cyclical Slow Growth Not Secular Stagnation and Monetary Policy Based on Fear of Deflation

IIA United States Housing Collapse

IIA1 Sales of New Houses

IIA2 United States House Prices

III World Financial Turbulence

IV Global Inflation

V World Economic Slowdown

VA United States

VB Japan

VC China

VD Euro Area

VE Germany

VF France

VG Italy

VH United Kingdom

VI Valuation of Risk Financial Assets

VII Economic Indicators

VIII Interest Rates

IX Conclusion

References

Appendixes

Appendix I The Great Inflation

IIIB Appendix on Safe Haven Currencies

IIIC Appendix on Fiscal Compact

IIID Appendix on European Central Bank Large Scale Lender of Last Resort

IIIG Appendix on Deficit Financing of Growth and the Debt Crisis

Preamble. The current federal debt limit of the United States is $28.8 trillion (https://home.treasury.gov/system/files/136/Daily-Debt-Subject-to-Limit-Activity-10-22-2021.pdf). The Net International Investment Position of the United States, or foreign debt, is $15.4 trillion (https://www.bea.gov/sites/default/files/2021-09/intinv221.pdf https://cmpassocregulationblog.blogspot.com/2021/10/total-nonfarm-hires-move-from-4986.html). The United States current account deficit is 3.3 percent of GDP in IIQ2021 (https://cmpassocregulationblog.blogspot.com/2021/10/total-nonfarm-hires-move-from-4986.html). The Treasury deficit of the United States reached $2.8 trillion in fiscal year 2021 (https://fiscal.treasury.gov/reports-statements/mts/). Total assets of Federal Reserve Banks reached $8.7 trillion on Nov 24, 2021 and securities held outright reached $8.2 trillion (https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1). US GDP nominal NSA reached $23.2 trillion in IIIQ2021 (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf).

Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 on Jan 4, 2021 to $4.967 per million Btu on Nov 123 2021 or 92.4 percent.

Chart VII-4, US, Natural Gas Futures Contract 1

Source: US Energy Information Administration

https://www.eia.gov/dnav/ng/hist/rngc1d.htm

I Mediocre Cyclical United States Economic Growth with GDP Four Trillion Dollars below Trend. IA Mediocre Cyclical United States Economic Growth provides the analysis of long-term and cyclical growth of GDP in the US with GDP Four Trillion Dollars or 17.8 percent below trend. Section IA1 Stagnating Real Private Fixed Investment analyzes weakness in investment in the initial part of the cycle followed by stronger performance and recent weakness/recovery in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Section IA2 Swelling Undistributed Corporate Profits provides corporate profits with high cyclical levels of undistributed corporate profits. Section IID United States International Terms of Trade provides data and analysis of relative prices in US international trade.

There is socio-economic stress in the combination of adverse events and cyclical performance:

Mediocre economic growth below potential and long-term trend, resulting in idle productive resources with GDP three trillion dollars below trend (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html). US GDP grew at the average rate of 3.1 percent per year from 1929 to 2020, with similar performance in whole cycles of contractions and expansions, but only at 1.3 percent per year on average from 2007 to 2020 and 1.3 percent from 2007 to 2020. GDP in IIIQ2021 is 17.8 percent lower than what it would have been had it grown at trend of 3.0 percent.
Private fixed investment stagnating initially followed by cumulative increase of 36.2 percent in the entire cycle from IVQ2007 to IIIQ2021 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html)
Twenty four million or 13.9 percent of the effective labor force unemployed or underemployed in involuntary part-time jobs with cyclically stagnating or declining real wages (https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/09/increase-in-aug-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/08/increase-in-jul-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/07/increase-in-jun-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/06/increase-in-may-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/05/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/03/increase-in-feb-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/02/increasing-valuations-of-risks.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/decrease-in-dec-2020-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/dollar-devaluation-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/11/increase-in-oct-2020-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2020/10/increasingvaluations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/07/increase-of-total-nonfarm-payroll-jobs.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/creation-of-three-million-private.html and earlier https://cmpassocregulationblog.blogspot.com/2020/05/fifty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/04/lockdown-of-economic-activity-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/03/stress-of-world-financial-markets-fomc.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/01/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/12/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/11/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/10/volatility-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/dollar-appreciation-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/twenty-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/increase-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/flattening-yield-curve-of-treasury.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/dollar-revaluation-twenty-one-million.html and earlier https://cmpassocregulationblog.blogspot.com/2019/02/wait-and-see-patient-forecast-dependent.html and earlier https://cmpassocregulationblog.blogspot.com/2019/01/the-fed-will-be-patient-adjusting.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/fluctuation-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/fluctuations-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/twenty-on00000000e-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/fomc-policy-rate-unchanged-competitive.html and earlier https://cmpassocregulationblog.blogspot.com/2018/07/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/04/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/increasing-interest-rates-twenty-four.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/07/fluctuating-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/fluctuating-risk-financial-assets-in.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/weakening-equities-with-exchange-rate.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-fed-funds-rate-followed-by.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/07/turbulence-of-financial-asset.html)
Stagnating real disposable income per person or income per person after inflation and taxes (https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/09/increase-in-aug-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/08/increase-in-jul-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/07/increase-in-jun-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/06/increase-in-may-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/05/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/increase-in-apr-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/03/increase-in-feb-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/02/increasing-valuations-of-risks.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/recovering-gdp-of-major-world-economies.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/dollar-devaluation-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/11/increase-in-oct-2020-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2020/10/increasingvaluations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/09/exchange-rate-fluctuations-1.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/thirty-eight-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/07/increase-of-total-nonfarm-payroll-jobs.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/creation-of-three-million-private.html and earlier https://cmpassocregulationblog.blogspot.com/2020/05/fifty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2020/04/lockdown-of-economic-activity-in.html and earlier https://cmpassocregulationblog.blogspot.com/2020/03/stress-of-world-financial-markets-fomc.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/01/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/12/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/11/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/10/volatility-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/09/increase-in-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/dollar-appreciation-contraction-of.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/twenty-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/increase-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/fluctuating-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/flattening-yield-curve-of-treasury.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/dollar-revaluation-twenty-one-million.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/mediocre-cyclical-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/fluctuation-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/fluctuations-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/fomc-increases-policy-interest-rate.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/revision-of-united-states-national.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/revision-of-united-states-national.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/fomc-policy-rate-unchanged-competitive.html and earlier https://cmpassocregulationblog.blogspot.com/2018/07/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/06/stronger-dollar-mediocre-cyclical.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/04/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/04/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/twenty-four-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/dollar-devaluation-cyclically.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/unchanged-fomc-policy-rate-gradual.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/twenty-one-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/09/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/data-dependent-monetary-policy-with.html and earlier https://cmpassocregulationblog.blogspot.com/2017/07/rising-yields-twenty-two-million.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/twenty-two-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/twenty-three-million-unemployed-or.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/twenty-six-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/mediocre-cyclical-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/rising-yields-and-dollar-revaluation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/the-case-for-increase-in-federal-funds.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-valuations-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/global-competitive-easing-or.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/07/financial-asset-values-rebound-from.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/financial-turbulence-twenty-four.html and earlier http://cmpassocregulationblog.blogspot.com/2016/05/twenty-four-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/04/proceeding-cautiously-in-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/03/twenty-five-million-unemployed-or.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/fluctuating-risk-financial-assets-in.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/dollar-revaluation-and-decreasing.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/dollar-revaluation-constraining.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/live-possibility-of-interest-rates.html and earlier http://cmpassocregulationblog.blogspot.com/2015/10/labor-market-uncertainty-and-interest.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-policy-dependent-on-what.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/international-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/higher-volatility-of-asset-prices-at.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/dollar-devaluation-and-carry-trade.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/volatility-of-valuations-of-financial.html)

Output of manufacturing (SIC) in Oct 2021 at 37.2 percent below long-term trend since 1919 and at 26.1 percent below trend since 1986. Output of manufacturing (NAICS) at 39.6 percent below trend measured from 1986 to 2006 and 23.0 percent below trend measured from 1999 to 2006 (https://cmpassocregulationblog.blogspot.com/2021/11/total-nonfarm-hires-move-from-4986.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/09/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/08/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/07/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/06/unchanged-fomc-target-fed-funds-rate.html and earlier https://cmpassocregulationblog.blogspot.com/2021/05/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/04/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/03/unchanged-fomc-target-fed-funds-rate.html and earlier https://cmpassocregulationblog.blogspot.com/2021/02/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2021/01/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/12/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/11/cumulative-growth-of-us-manufacturing.html and earlier (https://cmpassocregulationblog.blogspot.com/2020/10/cumulative-growth-of-us-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/09/federal-open-market-committee-leaves.html and earlier https://cmpassocregulationblog.blogspot.com/2020/08/us-industrial-production-increased-3.html and earlier https://cmpassocregulationblog.blogspot.com/2020/07/growth-of-industrial-production-of-54.html and earlier https://cmpassocregulationblog.blogspot.com/2020/06/recovery-in-jun-2020-of-manufacturing.html and earlier https://cmpassocregulationblog.blogspot.com/2020/05/recovery-without-hiring-twenty-million.html and earlier https://cmpassocregulationblog.blogspot.com/2020/04/contraction-of-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2020/03/sharp-contraction-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2020/02/declining-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2020/01/declining-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/12/diverging-economic-conditions-and.html and earlier https://cmpassocregulationblog.blogspot.com/2019/11/oscillating-risk-financial-assets-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/10/increasing-valuations-of-risk-financial_26.html and earlier https://cmpassocregulationblog.blogspot.com/2019/09/uncertain-fomc-outlook-of-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2019/08/global-decline-of-yields-of-government.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/global-manufacturing-stress-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/07/global-manufacturing-stress-world.html and earlier https://cmpassocregulationblog.blogspot.com/2019/06/fomc-outlook-uncertainty-central-bank.html and earlier https://cmpassocregulationblog.blogspot.com/2019/05/decreasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/04/increasing-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2019/03/inverted-yield-curve-of-treasury.html and earlier (https://cmpassocregulationblog.blogspot.com/2019/02/revaluation-of-yuanus-dollar-exchange.html and earlier https://cmpassocregulationblog.blogspot.com/2019/01/delays-in-updating-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/12/increase-of-interest-rates-by-monetary.html and earlier https://cmpassocregulationblog.blogspot.com/2018/11/weaker-world-economic-growth-with.html and earlier https://cmpassocregulationblog.blogspot.com/2018/10/oscillation-of-valuations-of-risk.html and earlier https://cmpassocregulationblog.blogspot.com/2018/09/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/08/world-inflation-waves-lost-economic.html and earlier https://cmpassocregulationblog.blogspot.com/2018/07/continuing-gradual-increases-in-fed.html and earlier (https://cmpassocregulationblog.blogspot.com/2018/06/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/05/dollar-revaluation-united-states_24.html and earlier (https://cmpassocregulationblog.blogspot.com/2018/04/rising-yields-world-inflation-waves.html and earlier https://cmpassocregulationblog.blogspot.com/2018/03/united-states-inflation-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/02/world-inflation-waves-united-states.html and earlier https://cmpassocregulationblog.blogspot.com/2018/01/dollar-devaluation-and-increasing.html and earlier https://cmpassocregulationblog.blogspot.com/2017/12/mediocre-cyclical-united-states_23.html and earlier https://cmpassocregulationblog.blogspot.com/2017/11/the-lost-economic-cycle-of-global_25.html and earlier https://cmpassocregulationblog.blogspot.com/2017/10/world-inflation-waves-long-term-and.html and earlier) (https://cmpassocregulationblog.blogspot.com/2017/09/monetary-policy-of-reducing-central.html and earlier https://cmpassocregulationblog.blogspot.com/2017/08/fluctuating-valuations-of-risk.html and earlier (https://cmpassocregulationblog.blogspot.com/2017/07/rising-valuations-of-risk-financial.html and earlier https://cmpassocregulationblog.blogspot.com/2017/06/fomc-interest-rate-increase-planned.html and earlier https://cmpassocregulationblog.blogspot.com/2017/05/dollar-devaluation-world-inflation.html and earlier https://cmpassocregulationblog.blogspot.com/2017/04/united-states-commercial-banks-assets.html and earlier https://cmpassocregulationblog.blogspot.com/2017/03/fomc-increases-interest-rates-world.html and earlier https://cmpassocregulationblog.blogspot.com/2017/02/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2017/01/world-inflation-waves-united-states.html and earlier http://cmpassocregulationblog.blogspot.com/2016/12/of-course-economic-outlook-is-highly.html and earlier http://cmpassocregulationblog.blogspot.com/2016/11/interest-rate-increase-could-well.html and earlier http://cmpassocregulationblog.blogspot.com/2016/10/dollar-revaluation-world-inflation.html and earlier http://cmpassocregulationblog.blogspot.com/2016/09/interest-rates-and-volatility-of-risk.html and earlier http://cmpassocregulationblog.blogspot.com/2016/08/interest-rate-policy-uncertainty-and.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/07/unresolved-us-balance-of-payments.html and earlier http://cmpassocregulationblog.blogspot.com/2016/06/fomc-projections-world-inflation-waves.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/05/most-fomc-participants-judged-that-if.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/04/contracting-united-states-industrial.html and earlier (http://cmpassocregulationblog.blogspot.com/2016/03/monetary-policy-and-competitive.html and earlier http://cmpassocregulationblog.blogspot.com/2016/02/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2016/01/unconventional-monetary-policy-and.html and earlier http://cmpassocregulationblog.blogspot.com/2015/12/liftoff-of-interest-rates-with-monetary.html and earlier http://cmpassocregulationblog.blogspot.com/2015/11/interest-rate-liftoff-followed-by.html http://cmpassocregulationblog.blogspot.com/2015/10/interest-rate-policy-quagmire-world.html and earlier http://cmpassocregulationblog.blogspot.com/2015/09/interest-rate-increase-on-hold-because.html and earlier http://cmpassocregulationblog.blogspot.com/2015/08/exchange-rate-and-financial-asset.html

The Bureau of Economic Analysis revised the national accounts of the United States since 1929 (https://www.bea.gov/newsreleases/national/gdp/2018/pdf/gdp2q18_adv.pdf):

“Comprehensive Update of the National Income and Product Accounts The estimates released today also reflect the results of the 15th comprehensive update of the National Income and Product Accounts (NIPAs). The updated estimates reflect previously announced improvements, and include the introduction of new not seasonally adjusted estimates for GDP, GDI, and their major components. For more information, see the Technical Note. Revised NIPA table stubs, initial results, and background materials are available on the BEA Web site.” The Bureau of Economic Analysis provided the annual revision of the national product accounts in the release of the first estimate or advanced estimate of IIQ2019 GDP (https://www.bea.gov/system/files/2019-07/gdp2q19_adv.pdf): “The estimates released today also reflect the results of the Annual Update of the National Income and

Product Accounts (NIPAs). The update covers the first quarter of 2014 through the first quarter of 2019.” The Bureau of Economic Analysis provides the annual revision of the national product accounts in the release of the first estimate or advanced estimate of IIQ2020 GDP (https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf): “The estimates released today also reflect the results of the Annual Update of the National Income and

Product Accounts (NIPAs). The timespan of the update is the first quarter of 2015 through the fourth quarter of 2019 for estimates of real GDP and its major components, and the first quarter of 1999 through the fourth quarter of 2019 for estimates of income and saving. The reference year remains 2012. More information on the 2020 Annual Update is included in the May Survey of Current Business article, “GDP and the Economy.” The BEA provided the annual update of the national accounts in the first or advanced estimate of IIQ2021 GDP (https://www.bea.gov/sites/default/files/2021-07/gdp2q21_adv.pdf): “Today’s release also reflects the Annual Update of the National Income and Product Accounts; the updated Industry Economic Accounts will be released on September 30, 2021, along with the third estimate of GDP for the second quarter of 2021. The timespan of the update is the first quarter of 1999 through the first quarter of 2021 and resulted in revisions to GDP, GDI, and their major components. The reference year remains 2012. More information on the 2021 Annual Update is included in the May Survey of Current Business article, GDP and the Economy. For the period of economic expansion from the second quarter of 2009 through the fourth quarter of 2019, real GDP increased at an annual rate of 2.3 percent, the same as previously published. For the period of economic contraction from the fourth quarter of 2019 through the second quarter of 2020, real GDP decreased at an annual rate of 19.2 percent, also the same as previously published. For the period of economic expansion from the second quarter of 2020 through the first quarter of 2021, real GDP increased at an annual rate of 14.1 percent, an upward revision of 0.1 percentage point from the previously published estimate. With today's release, most NIPA tables are available through BEA’s Interactive Data application on the BEA website (www.bea.gov). See Information on Updates to the National Economic Accounts for the complete table release schedule and a summary of results through 2020, which includes a discussion of methodology changes. A table showing the major current-dollar revisions and their sources for each component of GDP, national income, and personal income is also provided. The August 2021 Survey of Current Business will contain an article describing the update in more detail. Previously published estimates, which are superseded by today's release, are found in BEA’s archives.”

Long-term economic performance in the United States consisted of trend growth of GDP at 3 percent per year and of per capita GDP at 2 percent per year as measured for 1870 to 2010 by Robert E Lucas (2011May). The economy returned to trend growth after adverse events such as wars and recessions. The key characteristic of adversities such as recessions was much higher rates of growth in expansion periods that permitted the economy to recover output, income and employment losses that occurred during the contractions. Over the business cycle, the economy compensated the losses of contractions with higher growth in expansions to maintain trend growth of GDP of 3 percent and of GDP per capita of 2 percent. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions.

The economy of the US can be summarized in growth of economic activity or GDP as fluctuating from mediocre growth of 2.7 percent on an annual basis in 2010 to 1.5 percent in 2011, 2.3 percent in 2012, 1.8 percent in 2013, 2.3 percent in 2014 and 2.7 percent in 2015. GDP growth was 1.7 percent in 2016 and 2.3 percent in 2017. GDP growth was 2.9 percent in 2018 and 2.3 percent in 2019. GDP contracted 3.4 percent in 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The following calculations show that actual growth is around 2.0 percent per year during the expansion phase. The rate of growth of 1.3 percent in the entire cycle from 2006 to 2020 and 1.3 percent from 2007 to 2020 is well below 3 percent per year in trend from 1870 to 2010, which the economy of the US always attained for entire cycles in expansions after events such as wars and recessions (Lucas 2011May). Revisions and enhancements of United States GDP and personal income accounts by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) provides valuable information on long-term growth and cyclical behavior. Table Summary provides relevant data.

Table Summary, Long-term and Cyclical Growth of GDP, Real Disposable Income and Real Disposable Income per Capita

	GDP
Long-Term
1929-2020	3.1
1947-2020	3.1
Whole Cycles
1980-1989	3.5
2006-2020	1.3
2007-2020	1.3
Cyclical Contractions ∆%
IQ1980 to IIIQ1980, IIIQ1981 to IVQ1982	-4.6
IVQ2007 to IIQ2009	-3.8
Cyclical Expansions Average Annual Equivalent ∆%
IQ1983 to IVQ1985 IQ1983-IQ1986 IQ1983-IIIQ1986 IQ1983-IVQ1986 IQ1983-IQ1987 IQ1983-IIQ1987 IQ1983-IIIQ1987 IQ1983 to IVQ1987 IQ1983 to IQ1988 IQ1983 to IIQ1988 IQ1983 to IIIQ1988 IQ1983 to IVQ1988 IQ1983 to IQ1989 IQ1983 to IIQ1989 IQ1983 to IIIQ1989 IQ1983 to IVQ1989 IQ1983 to IQ1990 IQ1983 to IIQ1990 IQ1983 to IIIQ1990 IQ1983 to IVQ1990	5.9 5.7 5.3 5.1 5.0 5.0 4.9 5.0 4.9 4.9 4.8 4.8 4.8 4.7 4.6 4.5 4.5 4.4 4.3 4.0
IQ1983 to IQ1991 IQ1983 to IIQ1991 IQ1983 to IIIQ1991 IQ1983 to IVQ1991 IQ1983 to IQ1992 IQ1983 to IIQ1992 IQ1983 to IIIQ1992 IQ1983 to IVQ1992 IQ1983 to IQ1993 IQ1983 to IIQ1993 IQ1983 to IIIQ1993 IQ1983 to IV1993 IQ1983 to IQ1994 IQ1983 to IIQ1994 IQ1983 to IIIQ1994 IQ1983 to IVQ1994 IQ1983 to IQ1995	3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.8 3.7 3.6 3.6 3.7 3.7 3.7 3.7 3.7 3.6
First Four Quarters IQ1983 to IVQ1983	7.9
IIIQ2009 to IIIQ2021	2.1
First Four Quarters IIIQ2009 to IIQ2010	2.9
	Real Disposable Income	Real Disposable Income per Capita
Long-Term
1929-2020	3.2	2.1
1947-1999	3.7	2.3
Whole Cycles
1980-1989	3.5	2.6
2006-2020	2.4	1.7

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

The revisions and enhancements of United States GDP and personal income accounts by the Bureau of Economic Analysis (BEA) (http://bea.gov/iTable/index_nipa.cfm) also provide critical information in assessing the current rhythm of US economic growth. The economy appears to be moving at a pace around 2.0 percent per year. Table Summary GDP provides the data.

Average Annual Growth in the Past Thirty-Nine Quarters. GDP growth in the four quarters of 2012, the four quarters of 2013, the four quarters of 2014, the four quarters of 2015, the four quarters of 2016, the four quarters of 2017, the four quarters of 2018, the four quarters of 2019, the four quarters of 2020 and the three quarters of 2021 accumulated to 21.3 percent. This growth is equivalent to 2.0 percent per year, obtained by dividing GDP in IIIQ2021 of $19,469.4 billion by GDP in IVQ2011 of $16,048.7 billion and compounding by 4/39: {[($19,469.4/$16,048.7)^4/39 -1]100 = 2.0 percent.
Average Annual Growth in the Past Four Quarters. GDP growth in the four quarters from IIIQ2020 to IIIQ2021 accumulated to 4.9 percent. This is obtained by dividing GDP in IIIQ2021 of $19,469.4 billion by GDP in IIIQ2020 of $18,560.8 billion and compounding by 4/4: {[($19,469.4/$18,560.8)^4/4 -1]100 = 4.9%}. The US economy increased 4.9 percent in IIIQ2021 relative to the same quarter a year earlier in IIIQ2020 (See Table 6 at https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf and the complete data at https://apps.bea.gov/iTable/index_nipa.cfm). Growth was at annual equivalent 5.2 percent in IIQ2014 and 4.7 percent IIIQ2014 and only at 1.8 percent in IVQ2014. GDP grew at annual equivalent 3.3 percent in IQ2015, 2.3 percent in IIQ2015, 1.3 percent in IIIQ2015 and 0.6 percent in IVQ2015. GDP grew at annual equivalent 2.4 percent in IQ2016 and at 1.2 percent annual equivalent in IIQ2016. GDP increased at 2.4 percent annual equivalent in IIIQ2016 and at 2.0 percent in IVQ2016. GDP grew at annual equivalent 1.9 percent in IQ2017 and at annual equivalent 2.3 percent in IIQ2017. GDP grew at annual equivalent 2.9 percent in IIIQ2017. GDP grew at annual equivalent 3.8 percent in IVQ2017. GDP grew at annual equivalent 3.1 percent in IQ2018, increasing at 3.4 percent annual equivalent in IIQ2018. GDP grew at annual equivalent 1.9 percent in IIIQ2018 and at 0.9 percent in IVQ2018. GDP grew at annual equivalent 2.4 percent in IQ2019 and at annual equivalent 3.2 percent in IIQ2019. GDP grew at annual equivalent 2.8 percent in IIIQ2019 and at 1.9 percent annual equivalent in IVQ2019. Growth was at annual equivalent minus 5.1 percent in IQ2020. Growth was at annual equivalent minus 31.2 percent in IIQ2020. GDP grew at annual equivalent 33.8 percent in IIIQ2020. Growth was at annual equivalent 4.5 percent in IVQ2020. GDP grew at annual equivalent 6.3 percent in IQ2021. GDP grew at annual equivalent 6.7 percent in IIQ2021. GDP grew at annual equivalent 2.1 percent in IIIQ2021. Another important revelation of the revisions and enhancements is that GDP was flat at 0.1 in IVQ2012, which is in the borderline of contraction, and negative in IQ2014. US GDP fell 0.4 percent in IQ2014. The rate of growth of GDP in the revision of IIIQ2013 is 3.2 percent in seasonally adjusted annual rate (SAAR).

Table Summary GDP, US, Real GDP and Percentage Change Relative to IVQ2007 and Prior Quarter, Billions Chained 2012 Dollars and ∆%

	Real GDP, Billions Chained 2012 Dollars	∆% Relative to IVQ2007	∆% Relative to Prior Quarter	∆% over Year Earlier
IVQ2007	15,767.1	NA	0.6	2.2
IVQ2011	16,048.7	1.8	1.1	1.5
IQ2012	16,180.0	2.6	0.8	2.6
IIQ2012	16,253.7	3.1	0.5	2.4
IIIQ2012	16,282.2	3.3	0.2	2.6
IVQ2012	16,300.0	3.4	0.1	1.6
IQ2013	16,441.5	4.3	0.9	1.6
IIQ2013	16,464.4	4.4	0.1	1.3
IIIQ2013	16,594.7	5.2	0.8	1.9
IVQ2013	16,712.8	6.0	0.7	2.5
IQ2014	16,654.2	5.6	-0.4	1.3
IIQ2014	16,868.1	7.0	1.3	2.5
IIIQ2014	17,064.6	8.2	1.2	2.8
IVQ2014	17,141.2	8.7	0.4	2.6
IQ2015	17,280.6	9.6	0.8	3.8
IIQ2015	17,380.9	10.2	0.6	3.0
IIIQ2015	17,437.1	10.6	0.3	2.2
IVQ2015	17,462.6	10.8	0.1	1.9
IQ2016	17,565.5	11.4	0.6	1.6
IIQ2016	17,618.6	11.7	0.3	1.4
IIIQ2016	17,724.5	12.4	0.6	1.6
IVQ2016	17,812.6	13.0	0.5	2.0
IQ2017	17,896.6	13.5	0.5	1.9
IIQ2017	17,996.8	14.1	0.6	2.1
IIIQ2017	18,126.2	15.0	0.7	2.3
IVQ2017	18,296.7	16.0	0.9	2.7
IQ2018	18,436.3	16.9	0.8	3.0
IIQ2018	18,590.0	17.9	0.8	3.3
IIIQ2018	18,679.6	18.5	0.5	3.1
IVQ2018	18,721.3	18.7	0.2	2.3
IQ2019	18,833.2	19.4	0.6	2.2
IIQ2019	18,982.5	20.4	0.8	2.1
IIIQ2019	19,112.7	21.2	0.7	2.3
IVQ2019	19,202.3	21.8	0.5	2.6
IQ2020	18,952.0	20.2	-1.3	0.6
IIQ2020	17,258.2	9.5	-8.9	-9.1
IIIQ2020	18,560.8	17.7	7.5	-2.9
IVQ2020	18,767.8	19.0	1.1	-2.3
IQ2021	19,055.7	20.9	1.5	0.5
IIQ2021	19,368.3	22.8	1.6	12.2
IIIQ2021	19,469.4	23.5	0.5	4.9
Cumulative ∆% IQ2012 to IIIQ2021	21.3
Annual Equivalent ∆%	2.0

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart GDP of the US Bureau of Economic Analysis provides the rates of growth of GDP at SAAR (seasonally adjusted annual rate) in the 16 quarters from IVQ2017 to IIIQ2021. Growth has been fluctuating. The final data point is 2.1 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart GDP, Seasonally Adjusted Quarterly Rates of Growth of United States GDP, ∆%

Source: US Bureau of Economic Analysis

https://www.bea.gov/data/gdp/gross-domestic-product

Historical parallels are instructive but have all the limitations of empirical research in economics. The more instructive comparisons are not with the Great Depression of the 1930s but rather with the recessions in the 1950s, 1970s and 1980s. The growth rates and job creation in the expansion of the economy away from recession are subpar in the current expansion compared to others in the past. Four recessions are initially considered, following the reference dates of the National Bureau of Economic Research (NBER) (https://www.nber.org/cycles.html): IIQ1953-IIQ1954, IIIQ1957-IIQ1958, IIIQ1973-IQ1975 and IQ1980-IIIQ1980. The data for the earlier contractions illustrate that the growth rate and job creation in the current expansion are inferior. The sharp contractions of the 1950s and 1970s are considered in Table I-1, showing the Bureau of Economic Analysis (BEA) quarter-to-quarter, seasonally adjusted (SA), yearly-equivalent growth rates of GDP. The recovery from the recession of 1953 consisted of four consecutive quarters of high percentage growth rates from IIQ1954 to IIIQ1955: 4.6, 8.1, 11.9 and 6.7. The recession of 1957 was followed by four consecutive high percentage growth rates from IIIQ1958 to IIQ1959: 9.6, 9.7, 7.9 and 9.3. The recession of 1973-1975 was followed by high percentage growth rates from IIQ1975 to IQ1976: 2.9, 7.0, 5.5 and 9.3. The disaster of the Great Inflation and Unemployment of the 1970s, which made stagflation notorious, is even better in growth rates during the expansion phase in comparison with the current cycle slow-growth recession.

Table I-1, US, Seasonally Adjusted Quarterly Percentage Growth Rates in Annual Equivalent of GDP in Cyclical Recessions and Following Four Quarter Expansions ∆%

	IQ	IIQ	IIIQ	IV
R IIQ1953-IIQ1954
1953			-2.2	-5.9
1954	-1.9
E IIIQ1954-IIQ1955
1954			4.6	8.1
1955	11.9	6.7
R IIIQ1957-IIQ1958
1957				-4.1
1958	-10.0
E IIIQ1958-IIQ1959
1958			9.6	9.7
1959	7.9	9.3
R IVQ1969-IV1970
1969				-1.9
1970	-0.6
E IIQ1970-IQ1971
1970		0.6	3.7	-4.2
1971	11.3
R IVQ1973-IQ1975
1973				3.8
1974	-3.4	1.0	-3.7	-1.5
1975	-4.8
E IIQ1975-IQ1976
1975		2.9	7.0	5.5
1976	9.3
R IQ1980-IIIQ1980
1980	1.3	-8.0	-0.5
R IQ1981-IVQ1982
1981	8.1	-2.9	4.9	-4.3
1982	-6.1	1.8	-1.5	0.2
E IQ1983-IVQ1983
1983	5.4	9.4	8.2	8.6
R IVQ2007-IIQ2009
2008	-2.3	2.1	-2.1	-8.4
2009	-4.4	-0.6
E IIIQ2009-IIQ2010
2009			1.5	4.5
2010	1.5	3.7

Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

The NBER dates another recession in 1980 that lasted about half a year. If the two recessions from IQ1980s to IIIQ1980 and IIIQ1981 to IVQ1982 are combined, the impact of lost GDP of 4.6 percent is more comparable to the latest revised 3.8 percent drop of the recession from IVQ2007 to IIQ2009. The recession in 1981-1982 is quite similar on its own to the 2007-2009 recession. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.4 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in https://apps.bea.gov/iTable/index_nipa.cfm). Table I-2 provides the Bureau of Economic Analysis (BEA) quarterly growth rates of GDP in SA yearly equivalents for the recessions of 1981 to 1982 and 2007 to 2009, using the latest major revision published on Jul 27, 2016, subsequent revisions, the revision since 1929 (https://www.bea.gov/newsreleases/national/gdp/2018/pdf/gdp2q18_adv.pdf), revising data since 1929 (“Comprehensive Update of the National Income and Product Accounts The estimates released today also reflect the results of the 15th comprehensive update of the National Income and Product Accounts (NIPAs). The updated estimates reflect previously announced improvements and include the introduction of new not seasonally adjusted estimates for GDP, GDI, and their major components. For more information, see the Technical Note. Revised NIPA table stubs, initial results, and background materials are available on the BEA Web site.”) and the third estimate for IIQ2019 (https://www.bea.gov/system/files/2019-09/gdp2q19_3rd.pdf) revising estimates from IQ2014 through IQ2019, which are available in the dataset of the US Bureau of Economic Analysis (https://apps.bea.gov/iTable/index_nipa.cfm). The first estimate for IIQ2020 (https://www.bea.gov/sites/default/files/2020-07/gdp2q20_adv.pdf) provides the annual update: “The estimates released today also reflect the results of the Annual Update of the National Income and Product Accounts (NIPAs). The timespan of the update is the first quarter of 2015 through the fourth quarter of 2019 for estimates of real GDP and its major components, and the first quarter of 1999 through the fourth quarter of 2019 for estimates of income and saving. The reference year remains 2012. More information on the 2020 Annual Update is included in the May Survey of Current Business article, “GDP and the Economy https://apps.bea.gov/scb/2020/05-may/0520-gdp-economy.htm#annual-update.” There is a third estimate of GDP for IQ2021 (https://www.bea.gov/sites/default/files/2021-06/gdp1q21_3rd_1.pdf). There is an annual update and revisions of historical data in the advanced estimate for GDP of IIQ2021 (https://www.bea.gov/sites/default/files/2021-07/gdp2q21_adv.pdf). There is a second estimate for IIIQ2021 (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf). There were four quarters of contraction in 1981-1982 ranging in rate from -1.5 percent to -6.1 percent and five quarters of contraction in 2007-2009 ranging in rate from -0.7 percent to -8.5 percent. The striking difference is that in the first forty eight quarters of expansion from IQ1983 to IVQ1994, shown in Table I-2 in relief, GDP grew at the high quarterly percentage growth rates of 5.4, 9.4, 8.2, 8.6, 8.1, 7.1, 3.9, 3.3, 3.9, 3.6, 6.2, 3.0, 3.8, 1.8, 3.9, 2.2, 3.0, 4.4, 3.5, 7.0, 2.1, 5.4, 2.4, 5.4, 4.1, 3.1, 3.0, 0.8, 4.4, 1.5, 0.3, minus 3.6, minus 1.9, 3.2, 2.0, 1.4 , 4.9, 4.4, 4.0, 4.2, 0.7, 2.3, 1.9, 5.5, 3.9, 5.5, 2.4, 4.7 and 1.4 in IQ1995. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). Table III-1 shows weaker performance in IIQ1990 and IIIQ1990 and contractions at 3.6 percent in IVQ1990 and 1.9 percent in IQ1991. In contrast, the percentage growth rates in the first forty-eight quarters of expansion from IIIQ2009 to IIQ2021 shown in relief in Table I-2 were mediocre: 1.5, 4.3, 2.0, 3.9, 3.1, 2.1, -1.0, 2.7, -0.2, 4.6, 3.3, 1.8, 0.7, 0.4, 3.5, 0.6, 3.2, 2.9, minus 1.4, 5.2, 4.7, 1.8, 3.3, 2.3, 1.3, 0.6, 2.4, 1.2, 2.4, 2.0, 1.9, 2.3, 2.9, 3.8, 3.1, 3.4, 1.9, 0.9, 2.4, 3.2, 2.8, 1.9, minus 5.1, minus 31.2, 33.8 in IIIQ2020, 4.5, 6.3, 6.7 and 2.1 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Economic growth and employment creation continued at slow rhythm during 2012 and in 2013-2019 while much stronger growth would be required in movement to full employment. The cycle is now long by historical standards and growth rates are typically weaker in the final periods of cyclical expansions.

Table I-2, US, Quarterly Growth Rates of GDP, % Annual Equivalent SA

Q	1981	1982	1983	1984	2008	2009	2010
I	8.1	-6.1	5.4	8.1	-1.6	-4.6	2.0
II	-2.9	1.8	9.4	7.1	2.3	-0.7	3.9
III	4.9	-1.5	8.2	3.9	-2.1	1.5	3.1
IV	-4.3	0.2	8.6	3.3	-8.5	4.3	2.1
				1985			2011
I				3.9			-1.0
II				3.6			2.7
III				6.2			-0.2
IV				3.0			4.6
				1986			2012
I				3.8			3.3
II				1.8			1.8
III				3.9			0.7
IV				2.2			0.4
				1987			2013
I				3.0			3.5
II				4.4			0.6
III				3.5			3.2
IV				7.0			2.9
				1988			2014
I				2.1			-1.4
II				5.4			5.2
III				2.4			4.7
IV				5.4			1.8
				1989			2015
I				4.1			3.3
II				3.1			2.3
III				3.0			1.3
IV				0.8			0.6
				1990			2016
I				4.4			2.4
II				1.5			1.2
III				0.3			2.4
IV				-3.6			2.0
				1991			2017
I				-1.9			1.9
II				3.2			2.3
III				2.0			2.9
IV				1.4			3.8
				1992			2018
I				4.9			3.1
II				4.4			3.4
III				4.0			1.9
IV				4.2			0.9
				1993			2019
I				0.7			2.4
II				2.3			3.2
III				1.9			2.8
IV				5.5			1.9
				1994			2020
I				3.9			-5.1
II				5.5			-31.2
III				2.4			33.8
IV				4.7			4.5
				1995			2021
				1.4			6.3
				1.2			6.7
				3.4			2.1
				2.7
				1996
				3.0
				6.8
				3.6
				4.2

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-1 provides the real GDP of the US between 1929 and 1999. US GDP grew at the yearly average rate of 3.5 percent between 1929 and 1999. There is an evident acceleration of the rate of GDP growth in the 1990s as shown by a much sharper slope of the growth curve. Cobet and Wilson (2002) define labor productivity as the value of manufacturing output produced per unit of labor input used (see Pelaez and Pelaez, The Global Recession Risk (2007), 137-44). Between 1950 and 2000, labor productivity in the US grew less rapidly than in Germany and Japan. The major part of the increase in productivity in Germany and Japan occurred between 1950 and 1973 while the rate of productivity growth in the US was relatively subdued in several periods. While Germany and Japan reached their highest growth rates of productivity before 1973, the US accelerated its rate of productivity growth in the second half of the 1990s. Between 1950 and 2000, the rate of productivity growth in the US of 2.9 percent per year was much lower than 6.3 percent in Japan and 4.7 percent in Germany. Between 1995 and 2000, the rate of productivity growth of the US of 4.6 percent exceeded that of Japan of 3.9 percent and the rate of Germany of 2.6 percent.

Chart I-1, US, Real GDP 1929-1999

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-1A provides real GDP annually from 1929 to 2020. Growth after the global recession from IVQ2007 to IIQ2009 has not been sufficiently high to compensate for the contraction as it had in past economic cycles. The drop of output in the recession from IVQ2007 to IIQ2009 has been followed by anemic recovery compared with return to trend at 3.0 percent from 1870 to 2010 after events such as wars and recessions (Lucas 2011May) and a standstill that can lead to growth recession, or low rates of economic growth. The expansion is relatively long compared to earlier expansion and there could be even another contraction or conventional recession in the future. This could be a fact in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The average rate of growth from 1947 to 2020 is 3.1 percent. The average growth rate from IV2007 to IIIQ2021 is only 1.5 percent in contrast with 2.9 percent annual equivalent from the end of the recession in IVQ2001 to the end of the expansion in IVQ2007. US economic growth has been at only 2.1 percent on average in the cyclical expansion in the 49 quarters from IIIQ2009 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IIIQ2021 (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%], or accumulating the quarter on quarter growth rates (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 50.1 percent. GDP in IIIQ2021 would be $23,673.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4204.2 billion than actual $19,469.4 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 24.1 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.9 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm). US GDP in IIIQ2021 is 17.8 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,469.4 billion in IIIQ2021 or 23.5 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.0 percent per year from Oct 1919 to Oct 2021. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 160.7748 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316 which is 37.2 percent below trend. The underperformance of manufacturing in Mar-Oct 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 167.3750 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316, which is 39.6 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Oct 2021. Using trend growth of 1.8 percent per year, the index would increase to 136.7143 in Oct 2021. The output of manufacturing at 101.0316 in Oct 2021 is 26.1 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 101.8071 in Oct 2021 or 20.2 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6868 in Dec 2007 to 168.4870 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 39.6 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6868 in Dec 2007 to 132.1797 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 23.0 percent below trend under this alternative calculation.

Chart I-1A, US, Real GDP 1929-2020

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-2 provides the growth of real quarterly GDP in the US between 1947 and 2021. The drop of output in the recession from IVQ2007 to IIQ2009 has been followed by anemic recovery compared with return to trend at 3.0 percent from 1870 to 2010 after events such as wars and recessions (Lucas 2011May) and a standstill that can lead to growth recession, or low rates of economic growth. The expansion is relatively long compared to earlier expansions and there could be another contraction or conventional recession in the future. The average rate of growth from 1947 to 2020 is 3.1 percent. The annual equivalent growth rate from IVQ2007 to IIIQ2021 is only 1.5 percent with 2.9 percent from the end of the recession in IVQ2001 to the end of the expansion in IVQ2007. There is sharp contraction in IQ2020 and IIQ2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) followed by sharp recovery in IIIQ2020, IVQ2020, IQ2021, IIQ2021 and IIIQ2021.

Chart I-2, US, Real GDP, Quarterly, 1947-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-3 provides real GDP percentage change on the quarter a year earlier for 1983-1995. The objective is simply to compare expansion in two recoveries from sharp contractions as shown in Table I-5. Growth rates in the early phase of the recovery in 1983 and 1984 were very high, which is the opportunity to reduce unemployment that has characterized cyclical expansion in the postwar US economy. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-3, Real GDP Percentage Change on Quarter a Year Earlier 1983-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

In contrast, growth rates in the comparable forty-eight quarters of expansion from 2009 to 2021 in Chart I-4 have been mediocre. As a result, growth has not provided the exit from unemployment and underemployment as in other cyclical expansions in the postwar period. Growth rates did not rise in V shape as in earlier expansions and then declined close to the standstill of growth recessions. There is sharp decrease in the rate of growth in IQ2020 relative to IQ2019 at 0.6 percent and contraction of 9.1 percent in IIQ2020 relative to IIQ2019. GDP contracted 2.9 percent in IIIQ2020 relative to IIIQ2019 and contracted 2.3 percent in IVQ2020 relative to IVQ019. GDP expanded at 0.5 percent in IQ2021 relative to IQ2020. GDP grew 12.2 percent in IIQ2021 relative to IIQ2020. GDP grew 4.9 percent from IIIQ2020 to IIIQ2021.

Chart I-4, US, Real GDP Percentage Change on Quarter a Year Earlier 2009-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Table I-3 provides percentage change of real GDP in the United States in the 1930s, 1980s and 2000s. The recession in 1981-1982 is quite similar on its own to the 2007-2009 recession. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.3 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in https://apps.bea.gov/iTable/index_nipa.cfm). Data are available for the 1930s only on a yearly basis. US GDP fell 4.6 percent in the two recessions (1) from IQ1980 to IIIQ1980 and (2) from III1981 to IVQ1982 and 3.8 percent cumulatively in the recession from IVQ2007 to IIQ2009. It is instructive to compare the first years of the expansions in the 1980s and the current expansion. GDP grew at 4.6 percent in 1983, 7.2 percent in 1984, 4.2 percent in 1985, 3.5 percent in 1986, 3.5 percent in 1987, 4.2 percent in 1988 and 3.7 percent in 1989. In contrast, GDP grew 2.7 percent in 2010, 1.5 percent in 2011, 2.3 percent in 2012, 1.8 percent in 2013, 2.3 percent in 2014 and 2.7 percent in 2015. GDP grew 1.7 percent in 2016 and 2.3 percent in 2017. GDP grew 2.9 percent in 2018 and 2.3 percent in 2019. Actual annual equivalent GDP growth in the thirty-nine quarters from IQ2012 to IIIQ2021 is 2.0 percent. GDP grew at 4.2 percent in 1985, 3.5 percent in 1986, 3.5 percent in 1987, 4.2 percent in 1988 and 3.7 percent in 1989. The forecasts of the central tendency of participants of the Federal Open Market Committee (FOMC) are in the range of 5.8 to 6.0 percent in 2021 (https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210922.pdf) with less reliable forecast of 3.4 to 3.5 percent in 2022 (https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20210922.pdf). Growth of GDP in the expansion from IIIQ2009 to IIIQ2021 has been at average 2.1 percent in annual equivalent with sharp contraction at 31.2 percent SAAR in IIQ2020 followed by sharp recovery at 33.8 percent in IIIQ2020, 4.5 percent in IVQ2020, 6.3 percent in IQ2021, 6.7 percent in IIQ2021 and 4.9 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Table I-3, US, Percentage Change of GDP in the 1930s, 1980s and 2000s, ∆%

Year	GDP ∆%	Year	GDP ∆%	Year	GDP ∆%
1930	-8.5	1980	-0.3	2000	4.1
1931	-6.4	1981	2.5	2001	1.0
1932	-12.9	1982	-1.8	2002	1.7
1933	-1.2	1983	4.6	2003	2.8
1934	10.8	1984	7.2	2004	3.9
1935	8.9	1985	4.2	2005	3.5
1936	12.9	1986	3.5	2006	2.8
1937	5.1	1987	3.5	2007	2.0
1938	-3.3	1988	4.2	2008	0.1
1939	8.0	1989	3.7	2009	-2.6
1940	8.8	1990	1.9	2010	2.7
1941	17.7	1991	-0.1	2011	1.5
1942	18.9	1992	3.5	2012	2.3
1943	17.0	1993	2.8	2013	1.8
1944	8.0	1994	4.0	2014	2.3
1945	-1.0	1995	2.7	2015	2.7
1946	-11.6	1996	3.8	2016	1.7
1947	-1.1	1997	4.4	2017	2.3
1948	4.1	1998	4.5	2018	2.9
1949	-0.6	1999	4.8	2019	2.3

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-5 provides percentage change of GDP in the US during the 1930s. There is vast literature analyzing the Great Depression (Pelaez and Pelaez, Regulation of Banks and Finance (2009), 198-217). Cole and Ohanian (1999) find that US real per capita output was lower by 11 percent in 1939 than in 1929 while the typical expansion of real per capita output in the US during a decade is 31 percent. Private hours worked in the US were 25 percent lower in 1939 relative to 1929.

Chart I-5, US, Percentage Change of GDP in the 1930s

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Accelerated growth in the initial quarters of expansion eliminated the unemployment and underemployment created during the contraction in the 1980s as shown in Chart I-6. The economy then returned to grow at the trend of expansion, interrupted by another contraction in 1991. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-6, US, Percentage Change of GDP in the 1980s

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-7 provides the rates of growth during the 2000s. Growth rates in the initial forty-eight quarters of expansion have been relatively lower than during recessions after World War II. As a result, unemployment and underemployment continue at the rate of 14.5 percent of the effective US labor force (https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/09/increase-in-aug-2021-of-nonfarm-payroll.html). There is sharp contraction at SAAR of 31.2 percent in IIQ2020 followed by sharp recovery at 33.8 percent in IIIQ2020, 4.5 percent in IVQ2020, 6.3 percent in IQ2021, 6.7 percent in IIQ2021 and 2.1 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart I-7, US, Percentage Change of GDP in the 2000s

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Characteristics of the four cyclical contractions are in Table I-4 with the first column showing the number of quarters of contraction; the second column the cumulative percentage contraction; and the final column the average quarterly rate of contraction. There were two contractions from IQ1980 to IIIQ1980 and from IIIQ1981 to IVQ1982 separated by three quarters of expansion. The drop of output combining the declines in these two contractions is 4.6 percent, which is almost equal to the decline of 3.8 percent in the contraction from IVQ2007 to IIQ2009. In contrast, during the Great Depression in the four years of 1930 to 1933, GDP in constant dollars fell 26.3 percent cumulatively and fell 45.3 percent in current dollars (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), 150-2, Pelaez and Pelaez, Globalization and the State, Vol. II (2009b), 205-7 and revisions in https://apps.bea.gov/iTable/index_nipa.cfm). The comparison of the global recession after 2007 with the Great Depression is entirely misleading.

Table I-4, US, Number of Quarters, GDP Cumulative Percentage Contraction and Average Percentage Annual Equivalent Rate in Cyclical Contractions

	Number of Quarters	Cumulative Percentage Contraction	Average Percentage Rate
IIQ1953 to IIQ1954	3	-2.4	-0.8
IIIQ1957 to IIQ1958	3	-3.0	-1.0
IVQ1973 to IQ1975	5	-3.1	-0.6
IQ1980 to IIIQ1980	2	-2.2	-1.1
IIIQ1981 to IVQ1982	4	-2.5	-0.64
IVQ2007 to IIQ2009	6	-3.8	-0.7

Sources: Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-5 shows the mediocre average annual equivalent growth rate of 2.1 percent of the US economy in the forty-nine quarters of the current cyclical expansion from IIIQ2009 to IIIQ2021. There is sharp contraction in IIQ2020 at SAAR of minus 31.2 percent followed by sharp growth at 33.8 percent in IIIQ2020, 4.5 percent in IVQ2020, 6.3 percent in IQ2021, 6.7 percent in IIQ2021 and 2.1 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). In sharp contrast, the average growth rate of GDP was:

5.7 percent in the first thirteen quarters of expansion from IQ1983 to IQ1986
5.3 percent in the first fifteen quarters of expansion from IQ1983 to IIIQ1986
5.1 percent in the first sixteen quarters of expansion from IQ1983 to IVQ1986
5.0 percent in the first seventeen quarters of expansion from IQ1983 to IQ1987
5.0 percent in the first eighteen quarters of expansion from IQ1983 to IIQ1987
4.9 percent in the first nineteen quarters of expansion from IQ1983 to IIIQ1987
5.0 percent in the first twenty quarters of expansion from IQ1983 to IVQ1987
4.9 percent in the first twenty-first quarters of expansion from IQ1983 to IQ1988
4.9 percent in the first twenty-two quarters of expansion from IQ1983 to IIQ1988
4.8 percent in the first twenty-three quarters of expansion from IQ1983 to IIIQ1988
4.8 percent in the first twenty-four quarters of expansion from IQ1983 to IVQ1988
4.8 percent in the first twenty-five quarters of expansion from IQ1983 to IQ1989
4.7 percent in the first twenty-six quarters of expansion from IQ1983 to IIQ1989
4.6 percent in the first twenty-seven quarters of expansion from IQ1983 to IIIQ1989
4.5 percent in the first twenty-eight quarters of expansion from IQ1983 to IVQ1989
4.5 percent in the first twenty-nine quarters of expansion from IQ1983 to IQ1990
4.4 percent in the first thirty quarters of expansion from IQ1983 to IIQ1990
4.3 percent in the first thirty-one quarters of expansion from IQ1983 to IIIQ1990
4.0 percent in the first thirty-two quarters of expansion from IQ1983 to IVQ1990
3.8 percent in the first thirty-three quarters of expansion from IQ1983 to IQ1991
3.8 percent in the first thirty-four quarters of expansion from IQ1983 to IIQ1991
3.8 percent in the first thirty-five quarters of expansion from IQ1983 to IIIQ1991
3.7 percent in the thirty-six quarters of expansion from IQ1983 to IVQ1991
3.7 percent in the thirty-seven quarters of expansion from IQ1983 to IQ1992
3.7 percent in the thirty-eight quarters of expansion from IQ1983 to IIQ1992
3.7 percent in the thirty-nine quarters of expansion from IQ1983 to IIIQ1992
3.8 percent in the forty quarters of expansion from IQ1983 to IVQ1992
3.7 percent in the forty-one quarters from IQ1983 to IQ1993
3.6 percent in the forty-two quarters from IQ1983 to IIQ1993
3.6 percent in the forty-three quarters from IQ1983 to IIIQ1993
3.7 percent in the forty-four quarters from IQ1983 to IVQ1993
3.7 percent in the forty-five quarters from IQ1983 to IQ1994
3.7 percent in the forty-six quarters from IQ1983 to IIQ1994
3.7 percent in the forty-seven quarters from IQ1983 to IIIQ1994
3.7 percent in the forty-eight quarters of expansion from IQ1983 to IVQ1994
3.6 percent in the forty-nine quarters of expansion from IQ1983 to IQ1995

The line “average first four quarters in four expansions” provides the average growth rate of 7.7 percent with 7.8 percent from IIIQ1954 to IIQ1955, 9.2 percent from IIIQ1958 to IIQ1959, 6.1 percent from IIIQ1975 to IIQ1976 and 7.9 percent from IQ1983 to IVQ1983. The United States missed this opportunity of high growth in the initial phase of recovery. BEA data show the US economy in standstill relative to historical experience with annual growth of 2.7 percent in 2010 decelerating to 1.5 percent annual growth in 2011, 2.3 percent in 2012, 1.8 percent in 2013, 2.3 percent in 2014, 2.7 percent in 2015, 1.7 percent in 2016, 2.3 percent in 2017, 2.9 percent in 2018 and 2.3 percent in 2019 (http://www.bea.gov/iTable/index_nipa.cfm) with contraction of 3.4 percent in 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.1 percent from IQ1983 to IVQ1986, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988. 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989. 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990. 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991. 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993. 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995 and at 7.9 percent from IQ1983 to IVQ1983. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). GDP grew 2.9 percent in the first four quarters of the expansion from IIIQ2009 to IIQ2010. GDP growth in the thirty-nine quarters from IQ2012 to IIIQ2021 accumulated to 21.3 percent. This growth is equivalent to 2.0 percent per year, obtained by dividing GDP in IIIQ2021 of $19,469.4 billion by GDP in IVQ2011 of $16,048.7 billion and compounding by 4/39: {[($19,469.4/$16,048.7)^4/39 -1]100 = 2.0 percent}.

Table I-5, US, Number of Quarters, Cumulative Growth and Average Annual Equivalent Growth Rate in Cyclical Expansions

	Number of Quarters	Cumulative Growth ∆%	Average Annual Equivalent Growth Rate
IIIQ 1954 to IQ1957	11	12.8	4.5
First Four Quarters IIIQ1954 to IIQ1955	4	7.8
IIQ1958 to IIQ1959	5	10.0	7.9
First Four Quarters IIIQ1958 to IIQ1959	4	9.2
IIQ1975 to IVQ1976	8	8.3	4.1
First Four Quarters IIIQ1975 to IIQ1976	4	6.1
IQ1983-IQ1986 IQ1983-IIIQ1986 IQ1983-IVQ1986 IQ1983-IQ1987 IQ1983-IIQ1987 IQ1983 to IIIQ1987 IQ1983 to IVQ1987 IQ1983 to IQ1988 IQ1983 to IIQ1988 IQ1983 to IIIQ1988 IQ1983 to IVQ1988 IQ1983 to IQ1989 IQ1983 to IIQ1989 IQ1983 to IIIQ1989 IQ1983 to IVQ1989 IQ1983 to IQ1990 IQ1983 to IIQ1990 IQ1983 to IIIQ1990 IQ1983 to IVQ1990 IQ1983 to IQ1991 IQ1983 to IIQ1991 IQ1983 to IIIQ1991 IQ1983 to IVQ1991 IQ1983 to IQ1992 IQ1983 to IIQ1992 IQ1983 to IIIQ1992 IQ1983 to IVQ1992 IQ1983 to IQ1993 IQ1983 to IIQ1993 IQ1983 to IIIQ1993 IQ1983 to IVQ1993 IQ1983 to IQ1994 IQ1983 to IIQ1994 IQ1983 to IIIQ1994 IQ1983 to IVQ1994 IQ1983 to IQ1995	13 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49	19.8 21.5 22.1 23.0 24.4 25.4 27.6 28.3 29.9 30.7 32.4 33.8 34.8 35.8 36.1 37.6 38.1 38.2 36.9 36.3 37.3 38.0 38.5 40.2 41.7 43.1 44.6 44.8 45.7 46.4 48.3 49.8 51.8 52.7 54.4 55.0	5.7 5.3 5.1 5.0 5.0 4.9 5.0 4.9 4.9 4.8 4.8 4.8 4.7 4.6 4.5 4.5 4.4 4.3 4.0 3.8 3.8 3.8 3.7 3.7 3.7 3.7 3.8 3.7 3.6 3.6 3.7 3.7 3.7 3.7 3.7 3.6
First Four Quarters IQ1983 to IVQ1983	4	7.9
Average First Four Quarters in Four Expansions*		7.7
IIIQ2009 to IIIQ2021	49	28.4	2.1
First Four Quarters IIIQ2009 to IIQ2010		2.9

*First Four Quarters: 7.8% IIIQ1954-IIQ1955; 9.2% IIIQ1958-IIQ1959; 6.1% IIIQ1975-IQ1976; 7.8% IQ1983-IVQ1983

Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-8 shows US real quarterly GDP growth from 1980 to 1995. The economy contracted during the recession and then expanded vigorously throughout the 1980s, rapidly eliminating the unemployment caused by the contraction. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-8, US, Real GDP, 1980-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-9 shows the entirely different situation of real quarterly GDP in the US between 2007 and 2021. The economy has underperformed during the first forty-nine quarters of expansion for the first time in the comparable contractions since the 1950s. The US economy was in a perilous cyclical slow growth now in 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021), shown by sharp contractions in the final data points in IQ2020 and IIQ2020 followed by sharp growth in IIIQ2020, IVQ2020, IQ2021, IIQ2021 and IIIQ2021.

Chart I-9, US, Real GDP, 2007-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

As shown in Tables I-4 and I-5 above the loss of real GDP in the US during the contraction was 3.8 percent but the gain in the cyclical expansion has been only 28.4 percent (first to the last row in Table I-5), using all latest revisions. As a result, the level of real GDP in IIIQ2021 with the third estimate and revisions is higher by only 28.4 percent than the level of real GDP in IVQ2007. The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 50.1 percent. GDP in IIIQ2021 would be $23,673.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4204.2 billion than actual $19,469.4 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 24.1 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.9 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm). US GDP in IIIQ2021 is 17.8 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,469.4 billion in IIIQ2021 or 23.5 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.0 percent per year from Oct 1919 to Oct 2021. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 160.7748 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316 which is 37.2 percent below trend. The underperformance of manufacturing in Mar-Oct 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 167.3750 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316, which is 39.6 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Oct 2021. Using trend growth of 1.8 percent per year, the index would increase to 136.7143 in Oct 2021. The output of manufacturing at 101.0316 in Oct 2021 is 26.1 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 101.8071 in Oct 2021 or 20.2 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6868 in Dec 2007 to 168.4870 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 39.6 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6868 in Dec 2007 to 132.1797 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 23.0 percent below trend under this alternative calculation. Table I-6 shows that the contraction concentrated in two quarters: decline of 2.2 percent in IVQ2008 relative to the prior quarter and decline of 1.2 percent in IQ2009 relative to IVQ2008. The combined fall of GDP in IVQ2008 and IQ2009 was 3.3 percent {[(1-0.022) x (1-0.012) -1]100 = -3.4%}, or {[(IQ2009 $15,187.5)/(IIIQ2008 $15,709.6) – 1]100 = -3.3%} except for rounding. Those two quarters coincided with the worst effects of the financial crisis (Cochrane and Zingales 2009). GDP fell 0.2 percent in IIQ2009 but grew 0.4 percent in IIIQ2009, which is the beginning of recovery in the cyclical dates of the NBER. Most of the recovery occurred in five successive quarters from IVQ2009 to IVQ2010 of growth of 1.1 percent in IVQ2009, 0.5 percent in IQ2010, 1.0 percent in IIQ2010 and nearly equal growth at 0.8 percent in IIIQ2010 and 0.5 percent in IVQ2010 for cumulative growth in those five quarters of 3.8 percent, obtained by accumulating the quarterly rates {[(1.011 x 1.005 x 1.01 x 1.008 x 1.005) – 1]100 = 4.0%} or {[(IVQ2010 $15,808.0)/(IIIQ2009 $15,216.6) – 1]100 = 3.9%} with minor rounding difference. The economy then stalled during the first half of 2011 with decline of 0.2 percent in IQ2011 and growth of 0.7 percent in IIQ2011 for combined annual equivalent rate of 1.0 percent {(0.998 x 1.007)²}. Growth picked up in IVQ2011 with 1.1 percent relative to IIIQ2011. Growth in a quarter relative to a year earlier in Table I-6 slows from over 2.6 percent during three consecutive quarters from IIQ2010 to IVQ2010 to 2.0 percent in IQ2011, 1.7 percent in IIQ2011, 0.9 percent in IIIQ2011 and 1.5 percent in IVQ2011. As shown below, growth of 1.5 percent in IVQ2011 was partly driven by inventory accumulation. In IQ2012, GDP grew 0.8 percent relative to IVQ2011 and 2.6 percent relative to IQ2011, decelerating to 0.5 percent in IIQ2012 and 2.4 percent relative to IIQ2011 and 0.2 percent in IIIQ2012 and 2.6 percent relative to IIIQ2011. Growth was 0.1 percent in IVQ2012 with 1.6 percent relative to a year earlier but mostly because of deduction of 1.70 percentage points of inventory divestment and 0.62 percentage points of reduction of one-time national defense expenditures. Growth was 0.9 percent in IQ2013 and 1.6 percent relative to IQ2012 in large part because of burning savings to consume caused by financial repression of zero interest rates. There is similar growth of 0.1 percent in IIQ2013 and 1.3 percent relative to a year earlier. In IIIQ2013, GDP grew 0.8 percent relative to the prior quarter and 1.9 percent relative to the same quarter a year earlier with inventory accumulation contributing 1.48 percentage points to growth at 3.2 percent SAAR in IIIQ2013. GDP increased 0.7 percent in IVQ2013 and 2.5 percent relative to a year earlier. GDP fell 0.4 percent in IQ2014 and grew 1.3 percent relative to a year earlier. Inventory divestment deducted 1.40 percentage points from GDP growth in IQ2014. GDP grew 1.3 percent in IIQ2014, 2.5 percent relative to a year earlier and at 5.2 SAAR with inventory change contributing 1.05 percentage points. GDP grew 1.2 percent in IIIQ2014 and 2.8 percent relative to a year earlier. GDP grew 0.4 percent in IVQ2014 and 2.6 percent relative to a year earlier. GDP increased 0.8 percent in IQ2015 and increased 3.8 percent relative to a year earlier partly because of low level during contraction of 0.4 percent in IQ2014. GDP grew 0.6 percent in IIQ2015 and 3.0 percent relative to a year earlier. GDP grew 0.3 percent in IIIQ2015 and 2.2 percent relative to a year earlier. GDP increased 0.1 percent in IVQ2015 and increased 1.9 percent relative to a year earlier. GDP grew 0.6 percent in IQ2016 and increased 1.6 percent relative to a year earlier. GDP grew 0.3 percent in IIQ2016 and increased 1.4 percent relative to a year earlier. GDP grew 0.6 percent in IIIQ2016 and increased 1.6 percent relative to a year earlier. GDP grew 0.5 percent in IVQ2016 and increased 2.0 percent relative to a year earlier. GDP grew 0.5 percent in IQ2017 and increased 1.9 percent relative to a year earlier. GDP grew 0.6 percent in IIQ2017 and 2.1 percent relative to a year earlier. GDP increased 0.7 percent in IIIQ2017 and increased 2.3 percent relative to a year earlier. GDP grew 0.9 percent in IVQ2017 and 2.7 percent relative to a year earlier. GDP increased 0.8 percent in IQ2018 and increased 3.0 percent relative to a year earlier. GDP grew 0.8 percent in IIQ2018 and increased 3.3 percent relative to a year earlier. GDP increased 0.5 percent in IIIQ2018 and increased 3.1 percent relative to a year earlier. GDP grew 0.2 percent in IVQ2018 and increased 2.3 percent relative to a year earlier. GDP grew 0.6 percent in IQ2019 and increased 2.2 percent relative to a year earlier. GDP grew 0.8 percent in IIQ2019 and increased 2.1 percent relative to a year earlier. GDP grew 0.7 percent in IIIQ2019 and increased 2.3 percent relative to a year earlier. GDP grew 0.5 percent in IVQ2019 and increased 2.6 percent relative to a year earlier. GDP decreased 1.3 percent in IQ2020 and increased 0.6 percent relative to a year earlier. GDP decreased 8.9 percent in IIQ2020 and decreased 9.1 percent relative to a year earlier. GDP increased 7.5 percent in IIIQ2020 and decreased 2.9 percent relative to a year earlier. GDP increased 1.1 percent in IVQ2020 and decreased 2.3 percent relative to a year earlier. GDP increased 1.5 percent in IQ2021 and increased 0.5 percent relative to a year earlier. GDP increased 1.6 percent in IIQ2021 and increased 12.2 percent relative to a year earlier. GDP increased 0.5 percent in IIIQ2021 and increased 4.9 percent relative to a year earlier (See Table 6 at https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf and entire data in https://apps.bea.gov/iTable/index_nipa.cfm), in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Rates of a quarter relative to the prior quarter capture better deceleration of the economy than rates on a quarter relative to the same quarter a year earlier. The critical question for which there is not yet definitive solution is whether what lies ahead is continuing growth recession with the economy crawling and unemployment/underemployment at extremely high levels or another contraction or conventional recession. Forecasts of various sources continued to maintain high growth in 2011 without taking into consideration the continuous slowing of the economy in late 2010 and the first half of 2011. The sovereign debt crisis in the euro area and growth in China have been common sources of doubts on the rate and direction of economic growth in the US. There is weak internal demand in the US with almost recent higher growth of investment and spikes of consumption driven by burning saving because of financial repression in the form of low interest rates and bloated balance sheet of the Fed.

Table I-6, US, Real GDP and Percentage Change Relative to IVQ2007, Prior Quarter and Quarter Year Earlier, Billions Chained 2012 Dollars and ∆%

	GDP $Billion	∆% 2007Q4	∆% Prior Quarter	∆% Quarter Year Earlier
2007Q4	15767.1	NA	0.6	2.2
2008Q1	15702.9	-0.4	-0.4	1.4
2008Q2	15792.8	0.2	0.6	1.4
2008Q3	15709.6	-0.4	-0.5	0.2
2008Q4	15366.6	-2.5	-2.2	-2.5
2009Q1	15187.5	-3.7	-1.2	-3.3
2009Q2	15161.8	-3.8	-0.2	-4.0
2009Q3	15216.6	-3.5	0.4	-3.1
2009Q4	15379.2	-2.5	1.1	0.1
2010Q1	15456.1	-2.0	0.5	1.8
2010Q2	15605.6	-1.0	1.0	2.9
2010Q3	15726.3	-0.3	0.8	3.3
2010Q4	15808.0	0.3	0.5	2.8
2011Q1	15769.9	0.0	-0.2	2.0
2011Q2	15876.8	0.7	0.7	1.7
2011Q3	15870.7	0.7	0.0	0.9
2011Q4	16048.7	1.8	1.1	1.5
2012Q1	16180.0	2.6	0.8	2.6
2012Q2	16253.7	3.1	0.5	2.4
2012Q3	16282.2	3.3	0.2	2.6
2012Q4	16300.0	3.4	0.1	1.6
2013Q1	16441.5	4.3	0.9	1.6
2013Q2	16464.4	4.4	0.1	1.3
2013Q3	16594.7	5.2	0.8	1.9
2013Q4	16712.8	6.0	0.7	2.5
2014Q1	16654.2	5.6	-0.4	1.3
2014Q2	16868.1	7.0	1.3	2.5
2014Q3	17064.6	8.2	1.2	2.8
2014Q4	17141.2	8.7	0.4	2.6
2015Q1	17280.6	9.6	0.8	3.8
2015Q2	17380.9	10.2	0.6	3.0
2015Q3	17437.1	10.6	0.3	2.2
2015Q4	17462.6	10.8	0.1	1.9
2016Q1	17565.5	11.4	0.6	1.6
2016Q2	17618.6	11.7	0.3	1.4
2016Q3	17724.5	12.4	0.6	1.6
2016Q4	17812.6	13.0	0.5	2.0
2017Q1	17896.6	13.5	0.5	1.9
2017Q2	17996.8	14.1	0.6	2.1
2017Q3	18126.2	15.0	0.7	2.3
2017Q4	18296.7	16.0	0.9	2.7
2018Q1	18436.3	16.9	0.8	3.0
2018Q2	18590.0	17.9	0.8	3.3
2018Q3	18679.6	18.5	0.5	3.1
2018Q4	18721.3	18.7	0.2	2.3
2019Q1	18833.2	19.4	0.6	2.2
2019Q2	18982.5	20.4	0.8	2.1
2019Q3	19112.7	21.2	0.7	2.3
2019Q4	19202.3	21.8	0.5	2.6
2020Q1	18952.0	20.2	-1.3	0.6
2020Q2	17258.2	9.5	-8.9	-9.1
2020Q3	18560.8	17.7	7.5	-2.9
2020Q4	18767.8	19.0	1.1	-2.3
2021Q1	19055.7	20.9	1.5	0.5
2021Q2	19368.3	22.8	1.6	12.2
2021Q3	19469.4	23.5	0.5	4.9

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-10 provides the percentage change of real GDP from the same quarter a year earlier from 1980 to 1995. There were two contractions almost in succession in 1980 and from 1981 to 1983. The expansion was marked by initial high rates of growth as in other recession in the postwar US period during which employment lost in the contraction was recovered. Growth rates continued to be high after the initial phase of expansion. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-10, Percentage Change of Real Gross Domestic Product from Quarter a Year Earlier 1980-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

The experience of recovery after 2009 is not as complete as during the 1980s. Chart I-11 shows the much lower rates of growth in the early phase of the current expansion and sharp decline from an early peak. The US missed the initial high growth rates in cyclical expansions that eliminate unemployment and underemployment. There is sharp decrease of the rate of growth of GDP to 0.6 percent in IQ2020 and minus 9.1 percent in IIQ2020 relative to a year earlier, decreasing 2.9 percent in IIIQ2020 relative to a year earlier, and 2.3 percent in IVQ2020 relative to a year earlier and increased 0.5 percent in IQ2021 relative to a year earlier, 12.2 percent in IIQ2021 relative to a year earlier and 4.9 percent in IIIQ2021 relative to a year earlier (See Table 6 at https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf and entire data in https://apps.bea.gov/iTable/index_nipa.cfm) in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart I-11, Percentage Change of Real Gross Domestic Product from Quarter a Year Earlier 2007-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-12 provides growth rates from a quarter relative to the prior quarter during the 1980s. There is the same strong initial growth followed by a long period of sustained growth. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-12, Percentage Change of Real Gross Domestic Product from Prior Quarter 1980-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-13 provides growth rates in a quarter relative to the prior quarter from 2007 to 2021. Growth in the current expansion after IIIQ2009 has not been as strong as in other postwar cyclical expansions. There is sharp contraction at SAAR of minus 5.1 percent in IQ2020 and minus 31.2 percent IIQ2020, increasing sharply at 33.8 percent in IIIQ2020 and at 4.5 percent in IVQ2020, 6.3 percent in IQ2021, 6.7 percent in IIQ2021 and 2.1 percent in IIIQ2021 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart I-13, Percentage Change of Real Gross Domestic Product from Prior Quarter 2007-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

The revised estimates and earlier estimates from IQ2008 to IQ2016 in seasonally adjusted annual equivalent rates are shown in Table I-7. The strongest revision is for IVQ2008 for which the contraction of GDP is revised from minus 6.8 percent to minus 8.9 percent and minus 8.2 percent. IQ2009 is also revised from contraction of minus 4.9 percent to minus 6.7 percent but then lowered to contraction of 5.3 percent and 5.4 percent. There is only minor revision in IIIQ2008 of the contraction of minus 4.0 percent to minus 3.7 percent and much lower to minus 1.9 percent. Growth of 5.0 percent in IV2009 is revised to 3.8 percent and then increased to 4.0 percent but lowered to 3.9 percent. Growth in IQ2010 is lowered from 3.9 percent to 2.3 percent and 1.7 percent. Growth in IIQ2010 is upwardly revised to 3.8 percent but then lowered to 2.2 percent. The final revision increased growth in IIQ2010 to 3.9 percent. Revisions lowered growth of 1.9 percent in IQ2011 to minus 1.5 percent. The revisions increased growth of 1.8 percent in IQ2013 to 2.7 percent and increased growth of 2.0 percent in IQ2012 to 2.3 percent. The revision reduced the decline of GDP from 2.9 percent in IQ2014 to 2.1 percent. The revision of Jul 20, 2015 reduced significantly the rate of growth in 2013. The revision of Jul 27, 2016 increased the growth rate in 2013 and 2014. The revisions do not alter the conclusion that the current expansion is much weaker than historical sharp contractions since the 1950s and is now changing into slow growth recession with higher risks of contraction and continuing underperformance.

Table I-7, US, Quarterly Growth Rates of GDP, % Annual Equivalent SA, Revised and Earlier Estimates

Quarters	Rev Jul 29, 2016	Rev Jul 30, 2015	Rev Jul 30, 2014	Rev Jul 31, 2013	Rev Jul 27, 2012	Rev Jul 29, 2011	Earlier Estimate
2008
I			-2.7	-2.7		-1.8	-0.7
II			2.0	2.0		1.3	0.6
III			-1.9	-2.0		-3.7	-4.0
IV			-8.2	-8.3		-8.9	-6.8
2009
I			-5.4	-5.4	-5.3	-6.7	-4.9
II			-0.5	-0.4	-0.3	-0.7	-0.7
III			1.3	1.3	1.4	1.7	1.6
IV			3.9	3.9	4.0	3.8	5.0
2010
I			1.7	1.6	2.3	3.9	3.7
II			3.9	3.9	2.2	3.8	1.7
III			2.7	2.8	2.6	2.5	2.6
IV			2.5	2.8	2.4	2.3	3.1
2011
I			-1.5	-1.3	0.1	0.4	1.9
II			2.9	3.2	2.5
III			0.8	1.4	1.3
IV			4.6	4.9	4.1
2012
I		2.7	2.3	3.7	2.0
II		1.9	1.6	1.2	1.3
III		0.5	2.5	2.8	3.1
IV		0.1	0.1	0.1	0.4
2013
I	2.8	1.9	2.7	1.1	1.8
II	0.8	1.1	1.8	2.5
III	3.1	3.0	4.5	4.1
IV	4.0	3.8	3.5	2.6
2014
I	-1.2	-0.9	-2.1	-2.9
II	4.0	4.6
III	5.0	4.3
IV	2.3	2.1
2015
I	2.0	0.6
II	2.6
III	2.0
IV	0.9
2016
I	0.8

Note: Rev: Revision

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Table I-8 provides contributions to the rate of growth of GDP by major sectors in percentage points. GDP contracted at the SAAR rate of 5.1 percent in IQ2020 and 31.2 percent in IIQ2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Personal consumption expenditures (PCE) subtracted 24.10 percentage points in IIQ2020 and subtracted 4.79 percentage points in IQ2020. Gross Domestic Investment (GDI) subtracted 9.64 percentage points in IIQ2020 and 0.92 percentage points in IQ2020. GDP grew at 6.3 percent in IQ2021, at 6.7 percent in IIQ2021 and at 2.0 percent in IIIQ2021. The highest contributions were 7.44 percentage points by PCE in IQ2021 and 7.92 percentage points in IIQ2021. PCE contributed 1.18 percentage points in IIIQ2021, GDI contributed 1.93 percentage points and net trade deducted 1.16 percentage points.

Table I-8, US, Contributions to the Rate of Growth of GDP in Percentage Points

	GDP	PCE	GDI	∆ PI	Trade	GOV
2021
I	6.3	7.44	-0.37	-2.62	-1.56	0.77
II	6.7	7.92	-0.65	-1.26	-0.18	-0.36
III	2.1	1.18	1.93	2.13	-1.16	0.16
2020
I	-5.1	-4.79	-0.92	-0.51	-0.05	0.63
II	-31.2	-24.10	-9.64	-4.01	1.53	0.97
III	33.8	25.51	11.71	6.84	-3.25	-0.19
IV	4.5	2.26	4.01	1.10	-1.65	-0.09
2019
I	2.4	0.43	1.13	0.49	0.39	0.47
II	3.2	2.37	0.48	-0.57	-0.50	0.86
III	2.8	2.12	0.22	-0.32	0.07	0.36
IV	1.9	1.13	-1.18	-0.99	1.43	0.52

Note: PCE: personal consumption expenditures; GDI: gross private domestic investment; ∆ PI: change in private inventories; Trade: net exports of goods and services; GOV: government consumption expenditures and gross investment; – is negative and no sign positive

GDP: percent change at annual rate; percentage points at annual rates

Source: US Bureau of Economic Analysis

Source: Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

The Bureau of Economic Analysis (BEA) (pages 1-2) explains growth of GDP in IIIQ2021 as follows (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf):

“Real gross domestic product (GDP) increasedat an annual rate of 2.1 percent in the third quarter of 2021 (table 1), according to the "second" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased6.7 percent. The GDP estimate released today is based on more complete source data than were available for the "advance" estimate issued last month. In the advance estimate, the increase in real GDP was 2.0 percent. The update primarily reflects upward revisions to personal consumption expenditures (PCE) and private inventory investment (refer to "Updates to GDP"). The increase in third quarter GDP reflected the continued economic impact of the COVID-19 pandemic. A resurgence of COVID-19 cases resulted in new restrictions and delays in the reopening of establishments in some parts of the country. Government assistance payments in the form of forgivable loans to businesses, grants to state and local governments, and social benefits to households all decreased. The full economic effects of the COVID-19 pandemic cannot be quantified in the GDP estimate for the third quarter because the impacts are generally embedded in source data and cannot be separately identified. For more information, refer to the Technical Note and Federal Recovery Programs and BEA Statistics. “

There are positive contributions to growth in IIIQ2021 shown in Table I-9:

Personal consumption expenditures growing at 1.7 percent.
Nonresidential fixed investment growing at 1.5 percent.
State and local government expenditures growing at 4.7 percent.
Inventory investment contributing 2.13 percentage points
Government expenditures growing at 0.9 percent

There were negative contributions in IIIQ2021:

· Imports, which are a deduction from growth, growing at 5.8 percent.

· Exports decreasing at 3.0 percent.

· Durable goods contracting at 24.4 percent

· Residential fixed investment contracting at 8.3 percent.

· Federal government expenditures contracting at 4.9 percent.

· National defense expenditures contracting at 1.6 percent.

The BEA finds accelerating factors:

State and local government expenditures growing at 4.7 percent after growing at 0.2 percent in IIQ2021.
Government expenditures growing at 0.9 percent after contracting at 2.0 percent in IIQ2021
Federal government expenditures contracting at 4.9 percent after contracting at 5.3 percent in IIQ2021
Imports, which are a deduction from growth, growing at 5.8 percent after growing at 7.1 percent in IIQ2021.
Inventory investment contributing 2.13 percentage points after subtracting 1.26 percentage points in IIQ2021.
Residential fixed investment contracting at 8.3 percent after contracting at 11.7 percent in IIQ2021

The BEA finds offsetting decelerating factors:

· Nonresidential fixed investment growing at 1.5 percent after growing at 9.2 percent in IIQ2021.

· Personal consumption expenditures growing at 1.7 percent after growing at 12.0 percent in IIQ2021.

· Durable goods contracting at 24.4 percent after growing at 11.6 percent in IIQ2021.

· Exports contracting at 3.0 percent after growing at 7.6 percent in IIQ2021.

· National defense expenditures contracting at 1.6 percent after contracting at 1.1 percent in IIQ2021.

An important aspect of growth in the US is the decline in growth of real disposable personal income, or what is left after taxes and inflation, which decreased at the rate of 0.2 percent in IIIQ2013 compared with a year earlier. Contraction of real disposable income of 2.5 percent in IVQ2013 relative to a year earlier is largely due to comparison with an artificially higher level in anticipations of income in Nov and Dec 2012 to avoid increases in taxes in 2013, an episode known as “fiscal cliff.” Real disposable personal income increased 3.1 percent in IQ2014 relative to a year earlier and 3.6 percent in IIQ2014 relative to a year earlier. Real disposable personal income increased 4.3 percent in IIIQ2014 relative to a year earlier and 5.2 percent in IVQ2014 compared with a year earlier. Real disposable personal income grew 4.9 percent in IQ2015 relative to a year earlier partly because of contraction of energy prices and increased at 4.4 percent in IIQ2015. Real disposable personal income grew at 4.0 percent in IIIQ2015 relative to a year earlier and at 3.0 percent in IVQ2015 relative to a year earlier. Real disposable income grew at 2.5 percent in IQ2016 relative to a year earlier and at 1.6 percent in IIQ2016 relative to a year earlier. Real disposable income grew at 1.8 percent in IIIQ2016 relative to a year earlier and at 1.8 percent in IVQ2016 compared with a year earlier. Real disposable income grew at 2.1 percent in IQ2017 relative to a year earlier and grew at 3.3 percent in IIQ2017 relative to a year earlier. Real disposable income grew at 3.5 percent in IIIQ2017 relative to a year earlier and grew 3.4 percent in IVQ2017 relative to a year earlier. Real disposable income grew at 3.6 percent in IQ2018 relative to a year earlier and grew at 3.4 percent in IIQ2018 relative to a year earlier. Real disposable personal income grew at 3.6 percent in IIIQ2018 relative to a year earlier and at 3.7 percent in IVQ2018 relative to a year earlier. Real disposable income grew at 3.2 percent in IQ2019 relative to a year earlier and grew at 2.1 percent in IIQ2019 relative to a year earlier. Real disposable income grew at 1.8 percent in IIIQ2019 relative to a year earlier. Real disposable income grew at 1.6 percent in IVQ2019 relative to a year earlier. Real disposable income grew at 1.4 percent in IQ2020 relative to a year earlier. Real disposable personal income grew at 12.5 percent in IIQ2020 relative to a year earlier. Real disposable income grew 6.9 percent in IIIQ2020 relative to a year earlier. Real disposable income grew at 4.0 percent in IVQ2020 relative to a year earlier. Real disposable income grew at 15.1 percent in IQ2021. Real disposable income contracted at 4.3 percent in IIQ2021 relative to a year earlier. Real disposable income contracted at 0.9 percent in IIIQ2021 relative to a year earlier. The effects of financial repression, or zero interest, are vividly shown in the decline of the savings rate, or personal saving as percent of disposable income from 10.2 percent in IVQ2012 to 6.6 percent in IIIQ2013 and 6.3 percent in IVQ2013. The savings rate eased to 7.3 percent in IQ2014, increasing to 7.4 percent in IIQ2014 and stabilizing to 7.4 percent in IIIQ2014. The savings rate moved to 7.4 percent in IVQ2014, increasing to 7.7 percent in IQ2015. The savings rate moved to 7.6 percent in IIQ2015, 7.7 percent in IIIQ2015 and 7.4 percent in IVQ2015. The savings ratio moved to 7.5 percent in IQ2016 and 6.6 percent in IIQ2016. The savings ratio eased at 6.3 percent in IIIQ2016 and at 6.4 percent in IVQ2016. The savings ratio reached 7.0 percent in IQ2017 and 6.7 percent in IIQ2017. The savings ratio eased to 6.7 percent in IIIQ2017 and 6.3 percent in IVQ2017. The savings ratio increased to 7.2 percent in IQ2018 and 7.6 percent in IIQ2018. The savings ratio eased to 7.5 percent in IIIQ2018 and increased to 7.8 percent in IVQ2018. The savings ratio increased to 8.5 percent in IQ2019, easing to 7.3 percent in IIQ2019. The savings ratio eased to 7.2 percent in IIIQ2019, stabilizing to 7.3 percent in IVQ2019. The savings ratio increased to 9.6 percent in IQ2020. The savings ratio increased to 26.1 percent in IIQ2020. The savings ratio eased to 16.0 percent in IIIQ2020. The savings ratio eased to 13.6 percent in IVQ2020. The savings ratio moved to 20.5 percent in IQ2021. The savings ratio eased to 10.9 percent in IIQ2021. The savings ratio eased to 9.6 percent in IIIQ2021. Anticipation of income in IVQ2012 to avoid higher taxes in 2013 caused increases in income and savings while higher payroll taxes in 2013 restricted income growth and savings in IQ2013. Zero interest rates induce risky investments with high leverage and can contract balance sheets of families, business and financial institutions when interest rates inevitably increase in the future. There is a tradeoff of weaker economy in the future when interest rates increase by meager growth in the present with forced consumption by zero interest rates. Microeconomics consists of the analysis of allocation of scarce resources to alternative and competing ends. Zero interest rates cloud he calculus of risk and returns in consumption and investment, disrupting decisions that maintain the economy in its long-term growth path.

Table I-9, US, Percentage Seasonally Adjusted Annual Equivalent Quarterly Rates of Increase, %

	III Q2020	IV Q2020	I Q2021	II Q2021	III Q2021
GDP	33.8	4.5	6.3	6.7	2.1
PCE	41.4	3.4	11.4	12.0	1.7
Durable Goods	89.0	1.1	50.0	11.6	-24.4
NRFI	18.7	12.5	12.9	9.2	1.5
RFI	59.9	34.4	13.3	-11.7	-8.3
Net Exports GS % Points	-3.25	-1.65	-1.56	-0.18	-1.16
Exports	54.5	22.5	-2.9	7.6	-3.0
Imports	89.2	31.3	9.3	7.1	5.8
GOV	-2.1	-0.5	4.2	-2.0	0.9
Federal GOV	-5.4	-3.1	11.3	-5.3	-4.9
National Defense	1.7	5.3	-5.8	-1.1	-1.6
GDP Growth % Points	0.11	0.22	-0.25	-0.04	-0.06
State/Local GOV	0.1	1.2	-0.1	0.2	4.7
∆ PI % Points	6.84	1.10	-2.62	-1.26	2.13
Final Sales of Domestic Product	25.9	3.4	9.1	8.1	0.0
Gross Domestic Purchases	37.8	6.1	7.7	6.7	3.2
Prices Gross Domestic Purchases	3.3	1.8	3.9	5.8	5.5
Prices of GDP	3.6	2.2	4.3	6.1	5.9
Prices of GDP Excluding Food and Energy	3.2	1.9	3.4	5.8	5.1
Prices of PCE	3.7	1.5	3.8	6.5	5.3
Prices of PCE Excluding Food and Energy	3.5	1.2	2.7	6.1	4.5
Prices of Market Based PCE	2.8	1.3	3.9	5.8	5.3
Prices of Market Based PCE Excluding Food and Energy	2.5	1.0	2.5	5.3	4.4
Real Disposable Personal Income*	6.9	4.0	15.1	-4.3	-0.9
Personal Saving As % Disposable Income	16.0	13.6	20.5	10.9	9.6

Note: PCE: personal consumption expenditures; NRFI: nonresidential fixed investment; RFI: residential fixed investment; GOV: government consumption expenditures and gross investment; ∆ PI: change in

private inventories; GDP - ∆ PI: final sales of domestic product; PP: percentage points; Personal savings rate: savings as percent of disposable income

*Percent change from quarter one year ago

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Percentage shares of GDP are in Table I-10. PCE (personal consumption expenditures) is equivalent to 68.8 percent of GDP and is under pressure with stagnant real disposable income per person, elevated levels of unemployment and underemployment and higher savings rates than before the global recession, temporarily interrupted by financial repression in the form of zero interest rates. There is even stronger pressure in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Gross private domestic investment is also growing slowly even with about two trillion dollars in cash holdings by companies. In a slowing world economy, it may prove more difficult to grow exports faster than imports to generate higher growth. Bouts of risk aversion revalue the dollar relative to most currencies in the world as investors increase their holdings of dollar-denominated assets.

Table I-10, US, Percentage Shares of GDP, %

	IIIQ2021
GDP	100.0
PCE	68.8
Goods	23.7
Durable	8.6
Nondurable	15.1
Services	45.1
Gross Private Domestic Investment	17.6
Fixed Investment	17.9
NRFI	13.3
Structures	2.5
Equipment & Software	5.5
Intellectual Property	5.2
RFI	4.7
Change in Private Inventories	-0.3
Net Exports of Goods and Services	-4.1
Exports	10.8
Goods	7.5
Services	3.2
Imports	14.8
Goods	12.3
Services	2.5
Government	17.6
Federal	6.7
National Defense	3.9
Nondefense	2.8
State and Local	10.9

PCE: personal consumption expenditures; NRFI: nonresidential fixed investment; RFI: residential fixed investment

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-11 shows percentage point (PP) contributions to the annual levels of GDP growth in the earlier recessions 1958-1959, 1975-1976, 1982-1993 and 2009, 2010, 2011, 2012, 2013, 2014 2015, 2016, 2017, 2018, 2019 and 2020. The data incorporate the new revisions released by the BEA. The most striking contrast is in the rates of growth of annual GDP in the expansion phases of 6.9 percent in 1959, 5.4 percent in 1976, and 4.6 percent in 1983 followed by 7.2 percent in 1984 and 4.2 percent in 1985. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). In contrast, GDP grew 2.7 percent in 2010 after six consecutive quarters of growth, 1.5 percent in 2011 after ten consecutive quarters of expansion, 2.3 percent in 2012 after 14 quarters of expansion, 1.8 percent in 2013 after 18 consecutive quarters of expansion, 2.3 percent in 2014 after 22 consecutive quarters of expansion and 2.7 percent in 2015 after twenty-six consecutive quarters of expansion. GDP grew at 1.7 percent in 2016 after thirty consecutive quarters of expansion. GDP grew at 2.3 percent in 2017 after 34 quarters of expansion. GDP grew at 2.9 percent in 2018 after 38 quarters of expansion. GDP grew at 2.3 percent in 2019 after 42 quarters of expansion. GDP contracted at 3.4 percent in 2020 after 46 quarters of expansion interrupted in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Annual levels also show much stronger growth of PCEs in the expansions after the earlier contractions than in the expansion after the global recession of 2007. Gross domestic investment was much stronger in the earlier expansions than in 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020.

Table I-11, US, Percentage Point Contributions to the Annual Growth Rate of GDP

	GDP	PCE	GDI	∆ PI	Trade	GOV
1958	-0.7	0.52	-1.16	-0.17	-0.87	0.76
1959	6.9	3.51	2.83	0.83	0.00	0.60
1975	-0.2	1.36	-2.91	-1.24	0.86	0.49
1976	5.4	3.41	2.91	1.37	-1.05	0.12
1982	-1.8	0.88	-2.46	-1.31	-0.59	0.37
1983	4.6	3.51	1.60	0.28	-1.32	0.79
1984	7.2	3.30	4.73	1.90	-1.54	0.74
1985	4.2	3.20	-0.01	-1.03	-0.39	1.37
1986	3.5	2.58	0.03	-0.31	-0.29	1.14
1987	3.5	2.15	0.53	0.41	0.17	0.62
1988	4.2	2.65	0.45	-0.13	0.81	0.26
1989	3.7	1.86	0.72	0.17	0.51	0.58
1990	1.9	1.28	-0.45	-0.21	0.40	0.65
1991	-0.1	0.12	-1.09	-0.26	0.62	0.25
1992	3.5	2.36	1.11	0.28	-0.04	0.10
1993	2.8	2.24	1.24	0.07	-0.56	-0.17
2009	-2.6	-0.88	-3.51	-0.82	1.07	0.72
2010	2.7	1.31	1.85	1.42	-0.43	-0.02
2011	1.5	1.16	0.94	-0.05	0.12	-0.67
2012	2.3	0.94	1.64	0.17	0.12	-0.42
2013	1.8	1.01	1.10	0.23	0.20	-0.47
2014	2.3	1.82	0.95	-0.12	-0.31	-0.17
2015	2.7	2.20	0.95	0.31	-0.78	0.33
2016	1.7	1.67	-0.18	-0.53	-0.17	0.35
2017	2.3	1.65	0.68	-0.01	-0.16	0.09
2018	2.9	1.96	0.98	0.16	-0.27	0.24
2019	2.3	1.48	0.60	0.05	-0.18	0.38
2020	-3.4	-2.55	-0.99	-0.52	-0.29	0.43

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table I-12. GDP contracted at 3.4 percent in 2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The highest impact in 2020 were subtractions of 2.55 percentage points from GDP growth by PCE (Personal Consumption Expenditures) and 0.99 percentage points by GDI (Gross Domestic Investment). Net exports of goods and services subtracted percentage points from GDP growth in all years: 0.16 in 2017, 0.27 in 2018, 0.18 in 2010 and 0.29 in 2020.

Table I-12, US, Contributions to Growth of Gross Domestic Product in Percentage Points

	2017	2018	2019	2020
GDP Growth ∆%	2.3	2.9	2.3	-3.4
Personal Consumption Expenditures (PCE)	1.65	1.96	1.48	-2.55
Goods	0.82	0.84	0.71	0.96
Durable	0.44	0.49	0.30	0.54
Nondurable	0.38	0.35	0.40	0.42
Services	0.83	1.13	0.78	-3.52
Gross Private Domestic Investment (GPDI)	0.68	0.98	0.60	-0.99
Fixed Investment	0.69	0.82	0.55	-0.47
Nonresidential	0.53	0.85	0.59	-0.73
Structures	0.13	0.12	0.06	-0.39
Equipment, software	0.16	0.36	0.19	-0.48
Intellectual Property	0.25	0.36	0.33	0.14
Residential	0.15	-0.02	-0.04	0.26
Change Private Inventories	-0.01	0.16	0.05	-0.52
Net Exports of Goods and Services	-0.16	-0.27	-0.18	-0.29
Exports	0.49	0.35	-0.01	-1.57
Goods	0.32	0.34	0.00	-0.76
Services	0.17	0.01	0.00	-0.81
Imports	-0.65	-0.62	-0.17	1.28
Goods	-0.53	-0.62	-0.07	0.65
Services	-0.12	0.00	-0.11	0.63
Government Consumption Expenditures and Gross Investment	0.09	0.24	0.38	0.43
Federal	0.02	0.20	0.25	0.33
National Defense	0.04	0.13	0.20	0.11
Nondefense	-0.01	0.07	0.04	0.21
State and Local	0.07	0.04	0.14	0.10

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Industrial production increased 1.6 percent in Oct 2021 and decreased 1.3 percent in Sep 2021 after changing 0.0 percent in Aug 2021, with all data seasonally adjusted, as shown in Table I-1.

Manufacturing decreased 22.4 percent from the peak in Jun 2007 to the trough in Apr 2009 and increased 13.5 percent from the trough in Apr 2009 to Dec 2019. Manufacturing increased 10.9 percent from the trough in Apr 2009 to Dec 2020. Manufacturing in Dec 2020 is lower by 13.9 percent relative to the peak in Jun 2007. Manufacturing increased 17.3 percent from the trough in Apr 2009 to Oct 2021. Manufacturing in Oct 2021 is 8.9 percent below the peak in Jun 2007. US economic growth has been at only 2.1 percent on average in the cyclical expansion in the 49 quarters from IIIQ2009 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Boskin (2010Sep) measures that the US economy grew at 6.2 percent in the first four quarters and 4.5 percent in the first 12 quarters after the trough in the second quarter of 1975; and at 7.7 percent in the first four quarters and 5.8 percent in the first 12 quarters after the trough in the first quarter of 1983 (Professor Michael J. Boskin, Summer of Discontent, Wall Street Journal, Sep 2, 201 http://professional.wsj.com/article/SB10001424052748703882304575465462926649950.html). There are new calculations using the revision of US GDP and personal income data since 1929 by the Bureau of Economic Analysis (BEA) (https://apps.bea.gov/iTable/index_nipa.cfm) and the second estimate of GDP for IIIQ2021 (https://www.bea.gov/sites/default/files/2021-11/gdp3q21_2nd.pdf). The average of 7.7 percent in the first four quarters of major cyclical expansions is in contrast with the rate of growth in the first four quarters of the expansion from IIIQ2009 to IIQ2010 of only 2.9 percent obtained by dividing GDP of $15,605.6 billion in IIQ2010 by GDP of $15,161.8 billion in IIQ2009 {[($15,605.6/$15,161.8) -1]100 = 2.9%], or accumulating the quarter on quarter growth rates (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html). The expansion from IQ1983 to IQ1986 was at the average annual growth rate of 5.7 percent, 5.3 percent from IQ1983 to IIIQ1986, 5.1 percent from IQ1983 to IVQ1986, 5.0 percent from IQ1983 to IQ1987, 5.0 percent from IQ1983 to IIQ1987, 4.9 percent from IQ1983 to IIIQ1987, 5.0 percent from IQ1983 to IVQ1987, 4.9 percent from IQ1983 to IQ1988, 4.9 percent from IQ1983 to IIQ1988, 4.8 percent from IQ1983 to IIIQ1988, 4.8 percent from IQ1983 to IVQ1988, 4.8 percent from IQ1983 to IQ1989, 4.7 percent from IQ1983 to IIQ1989, 4.6 percent from IQ1983 to IIIQ1989, 4.5 percent from IQ1983 to IVQ1989, 4.5 percent from IQ1983 to IQ1990, 4.4 percent from IQ1983 to IIQ1990, 4.3 percent from IQ1983 to IIIQ1990, 4.0 percent from IQ1983 to IVQ1990, 3.8 percent from IQ1983 to IQ1991, 3.8 percent from IQ1983 to IIQ1991, 3.8 percent from IQ1983 to IIIQ1991, 3.7 percent from IQ1983 to IVQ1991, 3.7 percent from IQ1983 to IQ1992, 3.7 percent from IQ1983 to IIQ1992, 3.7 percent from IQ1983 to IIIQ1992, 3.8 percent from IQ1983 to IVQ1992, 3.7 percent from IQ1983 to IQ1993, 3.6 percent from IQ1983 to IIQ1993, 3.6 percent from IQ1983 to IIIQ1993, 3.7 percent from IQ1983 to IVQ1993, 3.7 percent from IQ1983 to IQ1994, 3.7 percent from IQ1983 to IIQ1994, 3.7 percent from IQ1983 to IIIQ1994, 3.7 percent from IQ1983 to IVQ1994, 3.6 percent from IQ1983 to IQ1995 and at 7.9 percent from IQ1983 to IVQ1983 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2021/10/us-gdp-growing-at-20-saar-in-iiiq2021.html). The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The US maintained growth at 3.0 percent on average over entire cycles with expansions at higher rates compensating for contractions. Growth at trend in the entire cycle from IVQ2007 to IIIQ2021 and in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 50.1 percent. GDP in IIIQ2021 would be $23,673.6 billion (in constant dollars of 2012) if the US had grown at trend, which is higher by $4204.2 billion than actual $19,469.4 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 24.1 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.9 percent of the effective labor force with the largest part originating in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event (https://cmpassocregulationblog.blogspot.com/2021/11/increase-in-oct-2021-of-nonfarm-payroll.html and earlier https://cmpassocregulationblog.blogspot.com/2021/10/increase-in-sep-2021-of-nonfarm-payroll.html). Unemployment is decreasing while employment is increasing in initial adjustment of the lockdown of economic activity in the global recession resulting from the COVID-19 event (https://www.bls.gov/covid19/employment-situation-covid19-faq-october-2021.htm). US GDP in IIIQ2021 is 17.8 percent lower than at trend. US GDP grew from $15,767.1 billion in IVQ2007 in constant dollars to $19,469.4 billion in IIIQ2021 or 23.5 percent at the average annual equivalent rate of 1.5 percent. Professor John H. Cochrane (2014Jul2) estimates US GDP at more than 10 percent below trend. Cochrane (2016May02) measures GDP growth in the US at average 3.5 percent per year from 1950 to 2000 and only at 1.76 percent per year from 2000 to 2015 with only at 2.0 percent annual equivalent in the current expansion. Cochrane (2016May02) proposes drastic changes in regulation and legal obstacles to private economic activity. The US missed the opportunity to grow at higher rates during the expansion and it is difficult to catch up because growth rates in the final periods of expansions tend to decline. The US missed the opportunity for recovery of output and employment always afforded in the first four quarters of expansion from recessions. Zero interest rates and quantitative easing were not required or present in successful cyclical expansions and in secular economic growth at 3.0 percent per year and 2.0 percent per capita as measured by Lucas (2011May). There is cyclical uncommonly slow growth in the US instead of allegations of secular stagnation. There is similar behavior in manufacturing. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.0 percent per year from Oct 1919 to Oct 2021. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 160.7748 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316 which is 37.2 percent below trend. The underperformance of manufacturing in Mar-Oct 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 167.3750 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316, which is 39.6 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Oct 2021. Using trend growth of 1.8 percent per year, the index would increase to 136.7143 in Oct 2021. The output of manufacturing at 101.0316 in Oct 2021 is 26.1 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 101.8071 in Oct 2021 or 20.2 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6868 in Dec 2007 to 168.4870 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 39.6 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6868 in Dec 2007 to 132.1797 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 23.0 percent below trend under this alternative calculation. Table I-13 provides national income by industry without capital consumption adjustment (WCCA). “Private industries” or economic activities have share of 87.8 percent in IIQ2021. Most of US national income is in the form of services. In Oct 2021, there were 149.217 million nonfarm jobs NSA in the US, according to estimates of the establishment survey of the Bureau of Labor Statistics (BLS) (https://www.bls.gov/news.release/empsit.nr0.htm Table B-1). Total private jobs of 127.001 million NSA in Oct 2021 accounted for 85.1 percent of total nonfarm jobs of 149.217 million, of which 12.536 million, or 9.9 percent of total private jobs and 8.4 percent of total nonfarm jobs, were in manufacturing. Private service-providing jobs were 106.140 million NSA in Oct 2021, or 71.1 percent of total nonfarm jobs and 83.6 percent of total private-sector jobs. Manufacturing has share of 9.6 percent in US national income in IIQ2021 and durable goods 5.7 percent, as shown in Table I-13. Most income in the US originates in services. Subsidies and similar measures designed to increase manufacturing jobs will not increase economic growth and employment and may actually reduce growth by diverting resources away from currently employment-creating activities because of the drain of taxation.

Table I-13, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	IIQ2021	% Total	IIIQ2021	% Total
National Income WCCA	19,157.3	100.0	19,818.0	100.0
Domestic Industries	18,926.9	98.8	19,569.8	98.7
Private Industries	16,822.0	87.8	17,416.1	87.9
Agriculture	189.2	1.0
Mining	155.5	0.8
Utilities	199.1	1.0
Construction	999.5	5.2
Manufacturing	1842.8	9.6
Durable Goods	1091.0	5.7
Nondurable Goods	751.8	3.9
Wholesale Trade	1064.3	5.6
Retail Trade	1437.2	7.5
Transportation & WH	571.4	3.0
Information	802.7	4.2
Finance, Insurance, RE	3407.2	17.8
Professional & Business Services	2972.9	15.5
Education, Health Care	1975.3	10.3
Arts, Entertainment	685.5	3.6
Other Services	519.5	2.7
Government	2104.9	11.0	2,153.7	10.9
Rest of the World	230.4	1.2	248.3	1.3

Notes: SSAR: Seasonally-Adjusted Annual Rate; Percentages Calculates from Unrounded Data; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

IA1 Stagnating Real Private Fixed Investment. Table IA1-1 provides quarterly seasonally adjusted annual rates (SAAR) of growth of private fixed investment for the recessions of the 1980s and the current economic cycle. In the cyclical expansion beginning in IQ1983 (https://www.nber.org/cycles.html), real private fixed investment in the United States grew at the average annual rate of 14.7 percent in the first eight quarters from IQ1983 to IVQ1984. Growth rates fell to an average of 2.2 percent in the following eight quarters from IQ1985 to IVQ1986 and to an average of 1.9 percent in the 12 quarters of 1985, 1986 and 1987. The average rate of growth in the four quarters of 1988 was 3.7 percent. There were only four quarters of contraction of private fixed investment from IQ1983 to IVQ1987. The National Bureau of Economic Research dates another cycle from Jul 1990 (IIIQ1981) to Mar 1991 (IQ1991) (https://www.nber.org/cycles.html), showing in Table III-1 with contractions of fixed investment in the final three quarters of 1990 and the first quarter of 1991. There is quite different behavior of private fixed investment in the thirty-six quarters of cyclical expansion from IIIQ2009 to IIQ2018. The average annual growth rate in the first eight quarters of expansion from IIIQ2009 to IIQ2011 was 4.6 percent, which is significantly lower than 14.7 percent in the first eight quarters of expansion from IQ1983 to IVQ1984. There is only robust growth of private fixed investment in the four quarters of expansion from IIQ2011 to IQ2012 at the average annual rate of 12.8 percent. Growth has fallen from the SAAR of 17.9 percent in IIIQ2011 to 0.6 percent in IIIQ2012, recovering to 7.4 percent in IVQ2012 and increasing at 7.0 percent in IQ2013. The SAAR of fixed investment fell to 7.1 percent in IIIQ2013 and to 5.5 percent in IVQ2013. The SAAR of fixed investment decreased to 4.1 percent in IQ2014. Fixed investment grew at the SAAR of 11.6 percent in IIQ2014 and at 7.9 percent in IIIQ2014. Fixed investment grew at 4.7 percent in IVQ2014, 1.1 percent in IQ2015 and 3.5 percent in IIQ2015. Fixed investment grew at 3.4 percent in IIIQ2015 and fell at 1.1 percent in IVQ2015. Fixed investment increased at 2.4 percent in IQ2016 and increased at 2.2 percent in IIQ2016. Fixed investment increased at 3.7 percent in IIIQ2016 and increased at 3.1 percent in IVQ2016. Fixed investment increased at 6.4 percent in IQ2017 and increased at 3.8 percent in IIQ2017. Fixed investment grew at 0.5 percent in IIIQ2017. Fixed investment grew at 8.1 percent in IVQ2017 and increased at 6.7 percent in IQ2018. Fixed investment grew at 6.0 percent in IIQ2018. Fixed investment increased at 0.8 percent in IIIQ2018 and increased at 1.8 percent in IVQ2018. Fixed investment increased at 3.7 percent in IQ2019 and increased at 6.1 percent in IIQ2019. Fixed investment increased at 3.1 percent in IIIQ2019. Fixed investment decreased at 1.1 percent in IVQ2019. Fixed investment decreased at 2.3 percent in IQ2020 and decreased at 30.4 percent in IIQ2020, increasing at 27.5 percent in IIIQ2020 and at 17.7 percent in IVQ2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Fixed investment grew at 13.0 percent in IQ2021 and increased at 3.3 percent in IIQ2021. Fixed investment decreased at 1.1 percent in IIIQ2021. Sudeep Reddy and Scott Thurm, writing on “Investment falls off a cliff,” on Nov 18, 2012, published in the Wall Street Journal (http://professional.wsj.com/article/SB10001424127887324595904578123593211825394.html?mod=WSJPRO_hpp_LEFTTopStories) analyze the decline of private investment in the US and inform that a review by the Wall Street Journal of filing and conference calls finds that 40 of the largest publicly traded corporations in the US have announced intentions to reduce capital expenditures in 2012.

Table IA1-1, US, Quarterly Growth Rates of Real Private Fixed Investment, % Annual Equivalent SA

Q	1981	1982	1983	1984	2008	2009	2010
I	3.8	-10.6	9.3	13.2	-6.1	-28.2	-0.2
II	3.2	-12.0	15.9	16.6	-3.2	-13.7	15.4
III	0.2	-9.2	24.4	8.2	-9.7	1.5	2.2
IV	-1.3	0.2	24.3	7.4	-23.9	2.0	7.8
				1985			2011
I				3.7			-0.7
II				5.2			9.7
III				-1.6			17.9
IV				7.8			10.6
				1986			2012
I				1.1			13.1
II				0.1			8.3
III				-1.8			0.6
IV				3.1			7.4
				1987			2013
I				-6.7			7.0
II				6.3			3.3
III				7.1			7.1
IV				-0.2			5.5
				1988			2014
I				0.2			4.1
II				8.1			11.6
III				1.9			7.9
IV				4.8			4.7
				1989			2015
IQ				3.6			1.1
IIQ				0.5			3.5
IIIQ				7.2			3.4
IVQ				-5.1			-1.1
				1990			2016
IQ				4.8			2.4
IIQ				-7.7			2.2
IIIQ				-3.2			3.7
IVQ				-9.9			3.1
				1991			2017
I				-10.6			6.4
II				1.2			3.8
III				0.5			0.5
IV				1.7			8.1
				1992			2018
I				4.5			6.7
II				13.8			6.0
III				4.7			0.8
IV				12.2			1.8
				1993			2019
I				3.0			3.7
II				7.4			6.1
III				6.4			3.1
IV				17.1			-1.1
				1994			2020
I				4.8			-2.3
II				8.3			-30.4
III				3.3			27.5
IV				10.0			17.7
				1995			2021
I				8.7			13.0
II				-0.3			3.3
III				5.7			-1.1
IV				8.0
				1996
				10.6
				13.0
				9.4
				6.5

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-1 of the US Bureau of Economic Analysis (BEA) provides seasonally adjusted annual rates of growth of real private fixed investment from 1980 to 1995. Growth rates recovered sharply during the first eight quarters, which was essential in returning the economy to trend growth and eliminating unemployment and most underemployment accumulated during the contractions. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart IA1-1, US, Real Private Fixed Investment, Seasonally Adjusted Annual Rates Percent Change from Prior Quarter, 1980-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Weak behavior of real private fixed investment from 2007 to 2021 is in Chart IA1-2. Growth rates of real private fixed investment were much lower during the initial phase of the current economic cycle, entered sharp trend of decline and recovered recently, with another decline followed by increase and renewed decline. Fixed investment contracted sharply, at 2.3 percent in IQ2020 and at 30.4 percent in IIQ2020, increasing at 27.5 percent in IIIQ2020 and at 17.7 percent in IVQ2020. Fixed investment grew at 13.0 percent in IQ2021, growing at 3.3 percent in IIQ2021. Fixed investment decreased at 1.1 percent in IIIQ2021. There is a downward effect in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart IA1-2, US, Real Private Fixed Investment, Seasonally Adjusted Annual Rates Percent Change from Prior Quarter, 2007-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Table IA1-2 provides real private fixed investment at seasonally adjusted annual rates from IVQ2007 to IIIQ2021 or for the complete economic cycle. The first column provides the quarter, the second column percentage change relative to IVQ2007, the third column the quarter percentage change in the quarter relative to the prior quarter and the final column percentage change in a quarter relative to the same quarter a year earlier. In IQ1980, real gross private domestic investment in the US was $933.1 billion of chained 2012 dollars, growing to $1,546.5 billion in IQ1995 or 65.7 percent. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). Real gross private domestic investment in the US increased 35.8 percent from $2,653.1 billion in IVQ2007 to $3,603.7 billion in IIIQ2021. Real private fixed investment increased 36.2 percent from $2,630.0 billion of chained 2012 dollars in IVQ2007 to $3,582.9 billion in IIIQ2021. Real gross private domestic investment fell at SAAR 48.8 percent in IIQ2020, increasing at 82.1 percent in IIIQ2020 and at 24.7 percent in IVQ2020, falling at 2.3 percent in IQ2021 and decreasing at 3.9 percent in IIQ2021. Real gross domestic investment increased at 11.6 percent in IIIQ2021. Private fixed investment fell at SAAR 30.4 percent in IIQ2020, increasing at 27.5 percent in IIIQ2020, at 17.7 percent in IVQ2020, 13.0 percent in IQ2021, 3.3 percent in IIQ2021 decreasing at 1.1 percent in IIIQ2021, in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Private fixed investment fell relative to IVQ2007 in all quarters preceding IVQ2012 and increased 0.9 percent in IIIQ2016, increasing 0.8 percent in IIQ2016 and increasing 0.5 percent in IQ2016. Private fixed investment increased 0.8 percent in IVQ2016. Private fixed investment increased 1.6 percent in IQ2017 and increased 0.9 percent in IIQ2017. Private fixed investment increased 0.1 percent in IIIQ2017 and increased 2.0 percent in IVQ2017. Private fixed investment increased 1.6 percent in IQ2018, increasing 1.5 percent in IIQ2018. Private fixed investment increased 0.2 percent in IIIQ2018, increasing 0.4 percent in IVQ2018. Private fixed investment increased 0.9 percent in IQ2019, increasing 1.5 percent in IIQ2019. Private fixed investment increased 0.8 percent in IIIQ2019. Private fixed investment decreased 0.3 percent in IVQ2019. Private fixed investment decreased 0.6 percent in IQ2020. Private fixed investment decreased 8.7 percent in IIQ2020. Private fixed investment increased 6.3 percent in IIIQ2020. Private fixed investment increased 4.2 percent in IVQ2020. Private fixed investment increased at 3.1 percent in IQ2021. Private fixed investment increased at 0.8 percent in IIQ2021. Private fixed investment decreased 0.3 percent in IIIQ2021. Growth of real private investment in Table IA1-2 is mediocre for all but four quarters from IIQ2011 to IQ2012. There is recent robust growth followed by sharp contraction and fast recovery in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The investment decision of United States corporations is fractured in the current economic cycle in preference of cash.

Table IA1-2, US, Real Private Fixed Investment and Percentage Change Relative to IVQ2007 and Prior Quarter, Billions of Chained 2012 Dollars and ∆%

	Real PFI, Billions Chained 2012 Dollars	∆% Relative to IVQ2007	∆% Relative to Prior Quarter	∆% over Year Earlier
2007Q4	2629.9	NA	-1.0	-1.1
2008Q1	2589.1	-1.6	-1.6	-2.6
2008Q2	2567.9	-2.4	-0.8	-3.8
2008Q3	2503.0	-4.8	-2.5	-5.7
2008Q4	2337.8	-11.1	-6.6	-11.1
2009Q1	2151.9	-18.2	-8.0	-16.9
2009Q2	2073.9	-21.1	-3.6	-19.2
2009Q3	2081.6	-20.9	0.4	-16.8
2009Q4	2092.0	-20.5	0.5	-10.5
2010Q1	2091.0	-20.5	0.0	-2.8
2010Q2	2167.1	-17.6	3.6	4.5
2010Q3	2178.7	-17.2	0.5	4.7
2010Q4	2220.0	-15.6	1.9	6.1
2011Q1	2216.2	-15.7	-0.2	6.0
2011Q2	2268.0	-13.8	2.3	4.7
2011Q3	2363.3	-10.1	4.2	8.5
2011Q4	2423.7	-7.8	2.6	9.2
2012Q1	2499.4	-5.0	3.1	12.8
2012Q2	2549.8	-3.0	2.0	12.4
2012Q3	2553.6	-2.9	0.1	8.1
2012Q4	2599.4	-1.2	1.8	7.2
2013Q1	2643.9	0.5	1.7	5.8
2013Q2	2665.3	1.3	0.8	4.5
2013Q3	2711.3	3.1	1.7	6.2
2013Q4	2748.0	4.5	1.4	5.7
2014Q1	2775.6	5.5	1.0	5.0
2014Q2	2852.8	8.5	2.8	7.0
2014Q3	2907.3	10.5	1.9	7.2
2014Q4	2941.2	11.8	1.2	7.0
2015Q1	2949.5	12.2	0.3	6.3
2015Q2	2974.9	13.1	0.9	4.3
2015Q3	2999.8	14.1	0.8	3.2
2015Q4	2991.8	13.8	-0.3	1.7
2016Q1	3009.2	14.4	0.6	2.0
2016Q2	3025.5	15.0	0.5	1.7
2016Q3	3052.8	16.1	0.9	1.8
2016Q4	3076.5	17.0	0.8	2.8
2017Q1	3124.7	18.8	1.6	3.8
2017Q2	3154.2	19.9	0.9	4.3
2017Q3	3158.1	20.1	0.1	3.5
2017Q4	3220.3	22.4	2.0	4.7
2018Q1	3273.2	24.5	1.6	4.8
2018Q2	3321.2	26.3	1.5	5.3
2018Q3	3327.9	26.5	0.2	5.4
2018Q4	3342.6	27.1	0.4	3.8
2019Q1	3372.8	28.2	0.9	3.0
2019Q2	3423.2	30.2	1.5	3.1
2019Q3	3449.3	31.2	0.8	3.6
2019Q4	3439.9	30.8	-0.3	2.9
2020Q1	3419.6	30.0	-0.6	1.4
2020Q2	3123.0	18.7	-8.7	-8.8
2020Q3	3318.5	26.2	6.3	-3.8
2020Q4	3456.6	31.4	4.2	0.5
2021Q1	3564.1	35.5	3.1	4.2
2021Q2	3593.0	36.6	0.8	15.0
2021Q3	3582.9	36.2	-0.3	8.0

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-3 provides real private fixed investment in chained dollars of 2009 from 2007 to 2021. Real private fixed investment increased 36.2 percent from $2,630.0 billion of chained 2012 dollars in IVQ2007 to $3,582.9 billion in IIIQ2021. Private fixed investment fell at SAAR 30.4 percent in IIQ2020, increasing at 27.5 percent in IIIQ2020, at 17.7 percent in IVQ2020, 13.0 percent in IQ2021 and 3.3 percent in IIQ2021. Private fixed investment decreased at 1.1 percent in IIIQ2021.

Chart IA1-3, US, Real Private Fixed Investment, Billions of Chained 2009 Dollars, 2007 to 2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-4 provides real gross private domestic investment in chained dollars of 2012 from 1980 to 1995. Real gross private domestic investment climbed 65.7 percent to $1,546.5 billion of 2012 dollars in IQ1995 above the level of $933.1 billion in IQ1980. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart IA1-4, US, Real Gross Private Domestic Investment, Billions of Chained 2009 Dollars at Seasonally Adjusted Annual Rate, 1980-1995

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-5 provides real gross private domestic investment in the United States in billions of chained dollars of 2012 from 2007 to 2021. Real gross private domestic investment reached a level of $3,603.7 billion in IIIQ2021, which was 35.8 percent higher than the level of $2,653.1 billion in IVQ2007 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart IA1-5, US, Real Gross Private Domestic Investment, Billions of Chained 2012 Dollars at Seasonally Adjusted Annual Rate, 2007-2021

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table IA1-3 shows that the share of gross private domestic investment in GDP has decreased from 20.0 percent in IIIQ2000 and 19.5 percent in IIIQ2006 to 17.6 percent in IIIQ2021. There are declines in percentage shares in GDP of all components with sharp reduction of residential investment from 4.7 percent in IIIQ2000 and 5.9 percent in IIIQ2006 to 4.7 percent in IIIQ2021. The share of fixed investment in GDP fell from 19.4 percent in IIIQ2000 and 19.0 percent in IIIQ2006 to 17.9 percent in IIIQ2021.

Table IA1-3, Percentage Shares of Gross Private Domestic Investment and Components in Gross Domestic Product, % of GDP

	IIIQ2021	IIIQ2006	IIIQ2000
Gross Private Domestic Investment	17.6	19.5	20.0
Fixed Investment	17.9	19.0	19.4
Nonresidential	13.3	13.1	14.7
Structures	2.5	3.1	3.2
Equipment and Software	5.5	6.3	7.5
Intellectual Property	5.2	3.7	4.0
Residential	4.7	5.9	4.7
Change in Private Inventories	-0.3	0.6	0.6

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Broader perspective is in Chart IA1-6 with the percentage share of gross private domestic investment in GDP in annual data from 1929 to 2020. There was sharp drop during the current economic cycle with incomplete recovery in contrast with sharp recovery after the recessions of the 1980s.

Chart IA1-6, US, Percentage Share of Gross Private Domestic Investment in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-7 provides percentage shares of private fixed investment in GDP with annual data from 1929 to 2020. The sharp contraction after the recessions of the 1980s was followed by sustained recovery while the sharp drop in the current economic cycle has not been recovered.

Chart IA1-7, US, Percentage Share of Private Fixed Investment in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-8 provides percentage shares in GDP of nonresidential investment from 1929 to 2020. There is again recovery from sharp contraction in the 1980s but inadequate recovery in the current economic cycle.

Chart IA1-8, US, Percentage Share of Nonresidential Investment in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-9 provides percentage shares of business equipment and software in GDP with annual data from 1929 to 2020. There is again inadequate recovery in the current economic cycle.

Chart IA1-9, US, Percentage Share of Business Equipment and Software in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-10 provides percentage shares of residential investment in GDP with annual data from 1929 to 2020. The salient characteristic of Chart IA1-10 is the vertical increase of the share of residential investment in GDP up to 2006 and subsequent collapse.

Chart IA1-10, US, Percentage Share of Residential Investment in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Finer detail is provided by the quarterly share of residential investment in GDP from 1979 to 2021 in Chart IA1-11. There was protracted growth of that share, accelerating sharply into 2006 followed with nearly vertical drop. The explanation of the sharp contraction of United States housing can probably be found in the origins of the financial crisis and global recession. Let V(T) represent the value of the firm’s equity at time T and B stand for the promised debt of the firm to bondholders and assume that corporate management, elected by equity owners, is acting on the

interests of equity owners. Robert C. Merton (1974, 453) states:

“On the maturity date T, the firm must either pay the promised payment of B to the debtholders or else the current equity will be valueless. Clearly, if at time T, V(T) > B, the firm should pay the bondholders because the value of equity will be V(T) – B > 0 whereas if they do not, the value of equity would be zero. If V(T) ≤ B, then the firm will not make the payment and default the firm to the bondholders because otherwise the equity holders would have to pay in additional money and the (formal) value of equity prior to such payments would be (V(T)- B) < 0.”

Pelaez and Pelaez (The Global Recession Risk (2007), 208-9) apply this analysis to the US housing market in 2005-2006 concluding:

“The house market [in 2006] is probably operating with low historical levels of individual equity. There is an application of structural models [Duffie and Singleton 2003] to the individual decisions on whether or not to continue paying a mortgage. The costs of sale would include realtor and legal fees. There could be a point where the expected net sale value of the real estate may be just lower than the value of the mortgage. At that point, there would be an incentive to default. The default vulnerability of securitization is unknown.”

There are multiple important determinants of the interest rate: “aggregate wealth, the distribution of wealth among investors, expected rate of return on physical investment, taxes, government policy and inflation” (Ingersoll 1987, 405). Aggregate wealth is a major driver of interest rates (Ingersoll 1987, 406). Unconventional monetary policy, with zero fed funds rates and flattening of long-term yields by quantitative easing, causes uncontrollable effects on risk taking that can have profound undesirable effects on financial stability. Excessively aggressive and exotic monetary policy is the main culprit and not the inadequacy of financial management and risk controls.

The net worth of the economy depends on interest rates. In theory, “income is generally defined as the amount a consumer unit could consume (or believe that it could) while maintaining its wealth intact” (Friedman 1957, 10). Income, Y, is a flow that is obtained by applying a rate of return, r, to a stock of wealth, W, or Y = rW (Ibid). According to a subsequent restatement: “The basic idea is simply that individuals live for many years and that therefore the appropriate constraint for consumption decisions is the long-run expected yield from wealth r*W. This yield was named permanent income: Y* = r*W” (Darby 1974, 229), where * denotes permanent. The simplified relation of income and wealth can be restated as:

W = Y/r (1)

Equation (1) shows that as r goes to zero, r →0, W grows without bound, W→∞.

Lowering the interest rate near the zero bound in 2003-2004 caused the illusion of permanent increases in wealth or net worth in the balance sheets of borrowers and also of lending institutions, securitized banking and every financial institution and investor in the world. The discipline of calculating risks and returns was seriously impaired. The objective of monetary policy was to encourage borrowing, consumption and investment but the exaggerated stimulus resulted in a financial crisis of major proportions as the securitization that had worked for a long period was shocked with policy-induced excessive risk, imprudent credit, high leverage and low liquidity by the incentive to finance everything overnight at close to zero interest rates, from adjustable rate mortgages (ARMS) to asset-backed commercial paper of structured investment vehicles (SIV).

The consequences of inflating liquidity and net worth of borrowers were a global hunt for yields to protect own investments and money under management from the zero interest rates and unattractive long-term yields of Treasuries and other securities. Monetary policy distorted the calculations of risks and returns by households, business and government by providing central bank cheap money. Short-term zero interest rates encourage financing of everything with short-dated funds, explaining the SIVs created off-balance sheet to issue short-term commercial paper to purchase default-prone mortgages that were financed in overnight or short-dated sale and repurchase agreements (Pelaez and Pelaez, Financial Regulation after the Global Recession, 50-1, Regulation of Banks and Finance, 59-60, Globalization and the State Vol. I, 89-92, Globalization and the State Vol. II, 198-9, Government Intervention in Globalization, 62-3, International Financial Architecture, 144-9). ARMS were created to lower monthly mortgage payments by benefitting from lower short-dated reference rates. Financial institutions economized in liquidity that was penalized with near zero interest rates. There was no perception of risk because the monetary authority guaranteed a minimum or floor price of all assets by maintaining low interest rates forever or equivalent to writing an illusory put option on wealth. Subprime mortgages were part of the put on wealth by an illusory put on house prices. The housing subsidy of $221 billion per year created the impression of ever increasing house prices. The suspension of auctions of 30-year Treasuries was designed to increase demand for mortgage-backed securities, lowering their yield, which was equivalent to lowering the costs of housing finance and refinancing. Fannie and Freddie purchased or guaranteed $1.6 trillion of nonprime mortgages and worked with leverage of 75:1 under Congress-provided charters and lax oversight. The combination of these policies resulted in high risks because of the put option on wealth by near zero interest rates, excessive leverage because of cheap rates, low liquidity because of the penalty in the form of low interest rates and unsound credit decisions because the put option on wealth by monetary policy created the illusion that nothing could ever go wrong, causing the credit/dollar crisis and global recession (Pelaez and Pelaez, Financial Regulation after the Global Recession, 157-66, Regulation of Banks, and Finance, 217-27, International Financial Architecture, 15-18, The Global Recession Risk, 221-5, Globalization and the State Vol. II, 197-213, Government Intervention in Globalization, 182-4).

Chart IA1-11, US, Percentage Share of Residential Investment in Gross Domestic Product, Quarterly, 1979-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-12 provides the share of intellectual property products investment in GDP with annual data from 1929 to 2020. This is an important addition in the revision and enhancement of GDP provided by the Bureau of Economic Analysis. The share rose sharply over time.

Chart IA1-12, US, Percentage Share of Intellectual Property Products Investment in Gross Domestic Product, Annual, 1929-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-13 provides the percentage share of intellectual property investment in GDP on a quarterly basis from 1979 to 2021.

Chart IA1-13, US, Percentage Share of Intellectual Property Investment in Gross Domestic Product, Quarterly, 1979-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Percentage shares of net trade (exports less imports), exports and imports in US Gross Domestic Product are in Chart IA1-13 from 1929 to 2020. There is sharp trend of decline of exports and imports after the global recession beginning in IVQ2007. Net trade has been subtracting from growth since the stagflation of the 1970s.

Chart IA1-13, US, Percentage Shares of Net Trade, Exports and Imports in Gross Domestic Product, Yearly, 1979-2020

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Contributions to the rate of growth of real GDP in percentage points by investment segments are in Table IA1-4. There are multiple subtractions in IQ2020 and IIQ2020 in investment segments in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). There is recovery in the return to economic activity from IIIQ2020 to IIQ2021. Private Fixed Investment (PFI) and Equipment (EQP) contributed to the recovery as also Non-Residential (NRES) and Residential (RES).

Table IA1-4, US, Contributions to the Rate of Growth of Real GDP in Percentage Points

	GDP	GDI	PFI	NRES	EQP	IPP	RES	∆INV
2021
I	6.3	-0.37	2.25	1.65	0.75	0.76	0.60	-2.62
II	6.7	-0.65	0.61	1.21	0.66	0.62	-0.60	-1.26
III	2.1	1.93	-0.20	0.21	-0.13	0.47	-0.41	2.13
2020
I	-5.1	-0.92	-0.41	-1.14	-1.30	0.18	0.73	-0.51
II	-31.2	-9.64	-5.63	-4.28	-1.99	-0.51	-1.36	-4.01
III	33.8	11.71	4.88	2.72	2.73	0.45	2.16	6.84
IV	4.5	4.01	2.92	1.57	1.29	0.50	1.34	1.10
2019
I	2.4	1.13	0.64	0.63	0.25	0.25	0.00	0.49
II	3.2	0.48	1.06	0.90	0.15	0.34	0.15	-0.57
III	2.8	0.22	0.54	0.40	-0.31	0.29	0.14	-0.32
IV	1.9	-1.18	-0.19	-0.23	-0.29	0.32	0.04	-0.99

GDP: Gross Domestic Product; GDI: Gross Domestic Investment; PFI: Private Fixed Investment; NRES: Nonresidential; EQP: Business Equipment and Software; IPP: Intellectual Property Products; RES: Residential; ∆INV: Change in Private Inventories.

GDI = PFI + ∆INV, may not add exactly because of errors of rounding.

GDP: Seasonally adjusted annual equivalent rate of growth in a quarter; components: percentage points at annual rate.

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

IA2 Swelling Undistributed Corporate Profits. Table IA1-5 provides value added of corporate business, dividends and corporate profits in billions of current dollars at seasonally adjusted annual rates (SAAR) in IVQ2007 and IIIQ2021 together with percentage changes. The last three rows of Table IA1-5 provide gross value added of nonfinancial corporate business, consumption of fixed capital and net value added in billions of chained 2012 dollars at SAARs. Deductions from gross value added of corporate profits down the rows of Table IA1-5 end with undistributed corporate profits. Profits after taxes with inventory valuation adjustment (IVA) and capital consumption adjustment (CCA) increased 186.0 percent in nominal terms from IVQ2007 to IIIQ2021 while net dividends increased to $1100.9 billion in IIIQ2021, and undistributed corporate profits swelled 581.6 percent from $138.3 billion in IQ2007 to $942.6 billion in IIIQ2021 and changed signs from minus $4.0 billion in current dollars in IVQ2007. Net dividends decreased from $1006.1 billion in IVQ2019 to $963.1 billion in IQ2020, increasing to $1,103.2 billion in IIQ2020, increasing to $1007.1 billion in IIIQ2020, $1171.1 billion in IVQ2020, $1007.6 billion in IQ2021 and $1157.5 billion in IIQ2021, as corporations distributed dividends to halt decrease in stock valuations in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. The investment decision of United States corporations has been fractured in the current economic cycle in preference of cash. Gross value added of nonfinancial corporate business adjusted for inflation increased 28.5 percent from IVQ2007 to IIIQ2021, which is much lower than nominal increase of 68.5 percent in the same period for gross value added of total corporate business.

Table IA1-5, US, Value Added of Corporate Business, Corporate Profits and Dividends, IVQ2007-IIQ2021

	IVQ2007	IIQ2021	∆%
Current Billions of Dollars Seasonally Adjusted Annual Rates (SAAR)
Gross Value Added of Corporate Business	8,188.5	13,801.2	68.5
Consumption of Fixed Capital	1,209.3	2,104.1	74.0
Net Value Added	6,979.2	11,697.1	67.6
Compensation of Employees	4,948.5	7,971.6	61.1
Taxes on Production and Imports Less Subsidies	686.7	787.6	14.7
Net Operating Surplus	1,343.9	2,938.0	118.6
Net Interest and Misc	200.8	361.7	80.1
Business Current Transfer Payment Net	70.1	135.9	94.0
Corporate Profits with IVA and CCA Adjustments	1,073.1	2,440.4	127.4
Taxes on Corporate Income	358.7	396.9	10.6
Profits after Tax with IVA and CCA Adjustment	714.4	2,043.5	186.0
Net Dividends	718.4	1100.9	53.2
Undistributed Profits with IVA and CCA Adjustment	-4.0	942.6	NA ∆% 581.6 relative to 138.3 in IQ2007
Billions of Chained USD 2012 SAAR
Gross Value Added of Nonfinancial Corporate Business	7,885.4	10,135.0	28.5
Consumption of Fixed Capital	1,107.7	1,716.4	55.0
Net Value Added	6,777.7	8,418.6	24.2

IVA: Inventory Valuation Adjustment; CCA: Capital Consumption Adjustment

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Table IA1-6 provides comparable United States value added of corporate business, corporate profits and dividends from IQ1980 to IVQ1994. There is significant difference both in nominal and inflation-adjusted data. Between IQ1980 and IQ1995, profits after tax with IVA and CCA increased 243.7 percent with net dividends growing 347.3 percent and undistributed profits increasing 151.1 percent. There was much higher inflation in the 1980s than in the current cycle. For example, the consumer price index increased 89.0 percent from Mar 1980 to Mar 1995 but only 30.6 percent between Dec 2007 and Sep 2021 (https://www.bls.gov/cpi/data.htm). The comparison is still valid in terms of inflation-adjusted data: gross value added of nonfinancial corporate business adjusted for inflation increased 64.0 percent between IQ1980 and IQ1995 but only 28.5 percent between IVQ2007 and IIIQ2021 while net value added not adjusted for inflation increased 164.4 percent between IQ1980 and IQ1995 but increased 68.5 percent between IVQ2007 and IIIQ2021. The National Bureau of Economic Research (NBER) dates a contraction of the US from IQ1990 (Jul) to IQ1991 (Mar) (https://www.nber.org/cycles.html). The expansion lasted until another contraction beginning in IQ2001 (Mar). US GDP contracted 1.4 percent from the pre-recession peak of $9404.5 billion of chained 2012 dollars in IIIQ1990 to the trough of $9275.3 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm). The global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event, sets downward pressure on profits in IIQ2020.

Table IA1-6, US, Value Added of Corporate Business, Corporate Profits and Dividends, IQ1980-IVQ1994

	IQ1980	IQ1995	∆%
Current Billions of Dollars Seasonally Adjusted Annual Rates (SAAR)
Gross Value Added of Corporate Business	1,653.6	4,371.5	164.4
Consumption of Fixed Capital	200.5	574.9	186.7
Net Value Added	1,453.1	3,796.6	161.3
Compensation of Employees	1,072.9	2,741.6	155.5
Taxes on Production and Imports Less Subsidies	121.5	381.9	214.3
Net Operating Surplus	258.7	673.0	160.1
Net Interest and Misc.	50.0	59.6	19.2
Business Current Transfer Payment Net	11.5	34.4	199.1
Corporate Profits with IVA and CCA Adjustments	197.2	579.0	193.6
Taxes on Corporate Income	85.4	194.7	128.0
Profits after Tax with IVA and CCA Adjustment	111.8	384.3	243.7
Net Dividends	52.6	235.3	347.3
Undistributed Profits with IVA and CCA Adjustment	59.3	148.9	151.1
Billions of Chained USD 2012 SAAR
Gross Value Added of Nonfinancial Corporate Business	3,140.9	5,152.1	64.0
Consumption of Fixed Capital	319.3	586.9	83.8
Net Value Added	2,821.6	4,565.2	61.8

IVA: Inventory Valuation Adjustment; CCA: Capital Consumption Adjustment

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-14 of the US Bureau of Economic Analysis provides quarterly corporate profits after tax and undistributed profits with IVA and CCA from 1979 to 2021. There is tightness between the series of quarterly corporate profits and undistributed profits in the 1980s with significant gap developing from 1988 and to the present with the closest approximation peaking in IVQ2005 and surrounding quarters. These gaps widened during all recessions including in 1991 and 2001 and recovered in expansions with exceptionally weak performance in the current expansion. The global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event, sets downward pressure on profits in IIQ2020 with recovery in IIIQ2020, IVQ2020 and 2021.

Chart IA1-14, US, Corporate Profits after Tax and Undistributed Profits with Inventory Valuation Adjustment and Capital Consumption Adjustment, Quarterly, 1979-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Table IA1-7 provides price, costs and profit per unit of gross value added of nonfinancial domestic corporate income for IVQ2007 and IIIQ2021 in the upper block and for IQ1980 and IQ1995 in the lower block. Compensation of employees or labor costs per unit of gross value added of nonfinancial domestic corporate income increased from 0.551 in IVQ2007 to 0.697 in IIIQ2021 in a fractured labor market with major transfers from government to individuals but increased from 0.320 in IQ1980 to 0.482 in IQ1995 in a more vibrant labor market. Unit nonlabor costs increased mildly from 0.259 per unit of gross value added in IVQ2007 to 0.287 in IIIQ2021 but increased from 0.116 in IQ1980 to 0.198 in IQ1995 in an economy closer to full employment of resources. Profits after tax with IVA and CCA per unit of gross value added of nonfinancial domestic corporate income increased from 0.079 in IVQ2007 to 0.158 in IIIQ2021 and from 0.027 in IQ1980 to 0.061 in IQ1995.

Table IA1-7, US, Price, Costs and Profit per Unit of Gross Value Added of Nonfinancial Domestic Corporate Income

	IVQ2007	IIIQ2021
Price per Unit of Real Gross Value Added of Nonfinancial Corporate Business	0.921	1.170
Compensation of Employees (Unit Labor Cost)	0.551	0.697
Unit Nonlabor Cost	0.259	0.287
Consumption of Fixed Capital	0.135	0.180
Taxes on Production and Imports less Subsidies plus Business Current Transfer Payments (net)	0.088	0.079
Net Interest and Misc. Payments	0.036	0.027
Corporate Profits with IVA and CCA Adjustment (Unit Profits from Current Production)	0.111	0.186
Taxes on Corporate Income	0.032	0.028
Profits after Tax with IVA and CCA Adjustment	0.079	0.158
	IQ1980	IQ1995
Price per Unit of Real Gross Value Added of Nonfinancial Corporate Business	0.487	0.768
Compensation of Employees (Unit Labor Cost)	0.320	0.482
Unit Nonlabor Cost	0.116	0.198
Consumption of Fixed Capital	0.060	0.098
Taxes on Production and Imports less Subsidies plus Business Current Transfer Payments (net)	0.039	0.075
Net Interest and Misc. Payments	0.017	0.024
Corporate Profits with IVA and CCA Adjustment (Unit Profits from Current Production)	0.052	0.088
Taxes on Corporate Income	0.024	0.027
Profits after Tax with IVA and CCA Adjustment	0.027	0.061

IVA: Inventory Valuation Adjustment; CCA: Capital Consumption Adjustment

Source: US Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart IA1-15 provides quarterly profits after tax with IVA and CCA per unit of gross value added of nonfinancial domestic corporate income from 1980 to 2021. In an environment of idle labor and other productive resources, nonfinancial corporate income increased after tax profits with IVA and CCA per unit of gross value added at a slower pace in the weak economy from IVQ2007 to IIIQ2021 than in the vibrant expansion following the cyclical contractions of the 1980s. There is strong downward pressure on profits in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Part of the profits was distributed as dividends and significant part was retained as undistributed profits in the current economy cycle with frustrated investment decision. There is a jump in IIIQ2020 and IQ2021 to IIIQ2021.

Chart IA1-15, US, Profits after Tax with Inventory Valuation Adjustment and Capital Consumption Adjustment per Unit of Gross Value Added of Nonfinancial Domestic Corporate Income, 1980-2021

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Corporate profits decreased at 0.3 percent in IVQ2020 and decreased at 1.1 percent after taxes, as shown in Table IA1-8. Corporate profits increased at 5.1 percent in IQ2021 and increased at 4.5 percent after taxes. Corporate profits increased at 10.5 percent in IIQ2021 and increased at 10.5 percent after taxes. Corporate profits increased at 4.3 percent in IIIQ2021 and increased at 4.2 percent after taxes. Corporate profits with IVA and CCA increased at 20.7 percent in IIIQ2021 relative to IIIQ2020 and profits after tax with IVA and CCA increased 19.1 percent in IIIQ2021 relative to IIIQ2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Net dividends increased at 2.1 percent in IVQ2020. Net dividends decreased at 2.7 percent in IQ2021. Net dividends increased at 3.8 percent in IIQ2021. Net dividends increased at 2.0 percent in IIIQ2021. Net dividends increased 5.2 percent in IIIQ2021 relative to IIIQ2020. Undistributed profits decreased at 6.8 percent in IVQ2020. Undistributed profits increased at 18.7 percent in IQ2021. Undistributed profits increased at 21.4 percent in IIQ2021. Undistributed profits increased at 7.3 percent in IIIQ2021. Undistributed profits increased at 44.1 percent in IIIQ2021 relative to IIIQ2020.

Table IA1-8, Quarterly Seasonally Adjusted Annual Equivalent Percentage Rates of Change of Corporate Profits, ∆%

	2019	2020	IVQ 2020	IQ 2021	IIQ 2021	IIIQ 2021	IIIQ21/ IIIQ20
Corporate Profits with IVA and CCA	2.7	-5.2	-0.3	5.1	10.5	4.3	20.7
Corporate Income Taxes	7.3	-8.8	5.1	8.9	10.1	4.8	32.2
After Tax Profits with IVA and CCA	2.1	-4.7	-1.1	4.5	10.5	4.2	19.1
Net Dividends	3.6	0.6	2.1	-2.7	3.8	2.0	5.2
Und Profits with IVA and CCA	-0.8	-15.6	-6.8	18.7	21.4	7.3	44.1

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

Table IA1-9 provides change from prior quarter of the level of seasonally adjusted annual rates of US corporate profits. There are three aspects. First, there is fluctuation in corporate profits. Corporate profits decreased at $7.9 billion in IVQ2020 in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Corporate profits increased at $123.9 billion in IQ2021. Corporate profits increased at $267.8 billion in IIQ2021. Corporate profits increased at $121.4 billion in IIIQ2021. Corporate profits after tax with IVA and CCA decreased at $23.2 billion in IVQ2020. Corporate profits after tax increased at $95.8 billion in IQ2021. Corporate profits after tax increased at $232.9 billion in IIQ2021. Corporate profits after tax increased at $103.1 billion in IIIQ2021. Net dividends increased at $28.9 billion in IVQ2020. Net dividends decreased at $37.8 billion in IQ2021. Net dividends increased at $51.3 billion in IIQ2021. Net dividends increased at $28.5 billion in IIIQ2021. Undistributed profits decreased at $52.1 billion in IVQ2020. Undistributed profits increased at $133.6 billion in IQ2021. Undistributed profits increased at $181.6 billion in IIQ2021. Undistributed profits increased at $74.6 billion in IIIQ2021. Undistributed corporate profits swelled 581.6 percent from $138.3 billion in IQ2007 to $942.6 billion in IIIQ2021 and changed signs from minus $4.0 billion in current dollars in IVQ2007. Net dividends decreased from $1006.1 billion in IVQ2019 to $963.1 billion in IQ2020, increasing to $1,103.2 billion in IIQ2020, increasing to $1007.1 billion in IIIQ2020, $1171.1 billion in IVQ2020, $1007.6 billion in IQ2021 and $1157.5 billion in IIQ2021, as corporations distributed dividends to halt decrease in stock valuations in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/cycles.html), in the lockdown of economic activity in the COVID-19 event. The investment decision of United States corporations has been fractured in the current economic cycle in preference of cash. Second, sharp and continuing strengthening of the dollar, with recent depreciation/fluctuations at the margin in global carry trades, is affecting balance sheets of US corporations with foreign operations (https://www.fasb.org/summary/stsum52.shtml) and the overall US economy. The bottom part of Table IA1-9 provides the breakdown of corporate profits with IVA and CCA in domestic industries and the rest of the world. Corporate profits with IVA and CCA decreased at $7.9 billion in IVQ2020. Profits from domestic industries decreased at $30.5 billion and profits from nonfinancial business decreased at $47.5 billion. Profits from the rest of the world increased at $22.6 billion. Corporate profits with IVA and CCA increased at $123.9 billion in IQ2021. Profits from domestic industries increased at $134.5 billion and profits from nonfinancial business increased at $133.2 billion. Profits from the rest of the world decreased at $10.6 billion. Corporate profits with IVA and CCA increased at $267.8 billion in IIQ2021. Profits from domestic industries increased at $274.0 billion and profits from nonfinancial business increased at $221.3 billion. Profits from the rest of the world decreased at $6.2 billion. Corporate profits with IVA and CCA increased at $121.4 billion in IIIQ2021. Profits from domestic industries increased at $81.4 billion and profits from nonfinancial business increased at $67.6 billion. Profits from the rest of the world increased at $40.1 billion. Total corporate profits with IVA and CCA were $2940.6 billion in IIIQ2021 of which $2440.4 billion from domestic industries, or 83.0 percent of the total, and $500.3 billion, or 17.0 percent, from the rest of the world. Nonfinancial corporate profits of $1821.3 billion account for 64.6 percent of the total. Third, there is reduction in the use of corporate cash for investment. Vipal Monga, David Benoit and Theo Francis, writing on “Companies send more cash back to shareholders,” published on May 26, 2015 in the Wall Street Journal (http://www.wsj.com/articles/companies-send-more-cash-back-to-shareholders-1432693805?tesla=y), use data of a study by Capital IQ conducted for the Wall Street Journal. This study shows that companies in the S&P 500 reduced investment in plant and equipment to median 29 percent of operating cash flow in 2013 from 33 percent in 2003 while increasing dividends and buybacks to median 36 percent in 2013 from 18 percent in 2003.

Table IA1-9, Change from Prior Quarter of Level of Seasonally Adjusted Annual Equivalent Rates of Corporate Profits, Billions of Dollars

	2019	2020	IVQ 2020	IQ 2021	II Q2021	IIIQ 2021
Corporate Profits with IVA and CCA	62.8	-124.0	-7.9	123.9	267.8	121.4
Corporate Income Taxes	20.7	-26.6	15.3	28.1	34.9	18.3
After Tax Profits with IVA and CCA	42.2	-97.5	-23.2	95.8	232.9	103.1
Net Dividends	48.0	8.5	28.9	-37.8	51.3	28.5
Und Profits with IVA and CCA	-5.8	-105.9	-52.1	133.6	181.6	74.6
Corporate Profits with IVA and CCA	62.8	-124.0	-7.9	123.9	267.8	121.4
Domestic Industries	71.1	-65.3	-30.5	134.5	274.0	81.4
Financial	57.3	-39.9	17.0	1.3	52.8	13.8
Nonfinancial	13.8	-25.5	-47.5	133.2	221.3	67.6
Rest of the World	-8.3	-58.7	22.6	-10.6	-6.2	40.1
Receipts from Rest of the World	-1.4	-98.8	47.8	34.2	27.4	43.1
Payments to the Rest of the World	6.9	-40.1	25.3	44.8	33.6	3.0

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm

IID. United States International Terms of Trade. Delfim Netto (1959) partly reprinted in Pelaez (1973) conducted two classical nonparametric tests (Mann 1945, Wallis and Moore 1941; see Kendall and Stuart 1968) with coffee-price data in the period of free markets from 1857 to 1906 with the following conclusions (Pelaez, 1976a, 280):

“First, the null hypothesis of no trend was accepted with high confidence; secondly, the null hypothesis of no oscillation was rejected also with high confidence. Consequently, in the nineteenth century international prices of coffee fluctuated but without long-run trend. This statistical fact refutes the extreme argument of structural weakness of the coffee trade.”

In his classic work on the theory of international trade, Jacob Viner (1937, 563) analyzed the “index of total gains from trade,” or “amount of gain per unit of trade,” denoted as T:

T= (∆P^e/∆Pⁱ)∆Q

Where ∆P^e is the change in export prices, ∆Pⁱ is the change in import prices and ∆Q is the change in export volume. Dorrance (1948, 52) restates “Viner’s index of total gain from trade” as:

“What should be done is to calculate an index of the value (quantity multiplied by price) of exports and the price of imports for any country whose foreign accounts are to be analysed. Then the export value index should be divided by the import price index. The result would be an index which would reflect, for the country concerned, changes in the volume of imports obtainable from its export income (i.e. changes in its "real" export income, measured in import terms). The present writer would suggest that this index be referred to as the ‘income terms of trade’ index to differentiate it from the other indexes at present used by economists.”

What really matters for an export activity especially during modernization is the purchasing value of goods that it exports in terms of prices of imports. For a primary producing country, the purchasing power of exports in acquiring new technology from the country providing imports is the critical measurement. The barter terms of trade of Brazil improved from 1857 to 1906 because international coffee prices oscillated without trend (Delfim Netto 1959) while import prices from the United Kingdom declined at the rate of 0.5 percent per year (Imlah 1958). The accurate measurement of the opportunity afforded by the coffee exporting economy was incomparably greater when considering the purchasing power in British prices of the value of coffee exports, or Dorrance’s (1948) income terms of trade.

The conventional theory that the terms of trade of Brazil deteriorated over the long term is without reality (Pelaez 1976a, 280-281):

“Moreover, physical exports of coffee by Brazil increased at the high average rate of 3.5 per cent per year. Brazil's exchange receipts from coffee-exporting in sterling increased at the average rate of 3.5 per cent per year and receipts in domestic currency at 4.5 per cent per year. Great Britain supplied nearly all the imports of the coffee economy. In the period of the free coffee market, British export prices declined at the rate of 0.5 per cent per year. Thus, the income terms of trade of the coffee economy improved at the relatively satisfactory average rate of 4.0 per cent per year. This is only a lower bound of the rate of improvement of the terms of trade. While the quality of coffee remained relatively constant, the quality of manufactured products improved significantly during the fifty-year period considered. The trade data and the non-parametric tests refute conclusively the long-run hypothesis. The valid historical fact is that the tropical export economy of Brazil experienced an opportunity of absorbing rapidly increasing quantities of manufactures from the "workshop" countries. Therefore, the coffee trade constituted a golden opportunity for modernization in nineteenth-century Brazil.”

Imlah (1958) provides decline of British export prices at 0.5 percent in the nineteenth century and there were no lost decades, depressions or unconventional monetary policies in the highly dynamic economy of England that drove the world’s growth impulse. Inflation in the United Kingdom between 1857 and 1906 is measured by the composite price index of O’Donoghue and Goulding (2004) at minus 7.0 percent or average rate of decline of 0.2 percent per year.

Simon Kuznets (1971) analyzes modern economic growth in his Lecture in Memory of Alfred Nobel:

“The major breakthroughs in the advance of human knowledge, those that constituted dominant sources of sustained growth over long periods and spread to a substantial part of the world, may be termed epochal innovations. And the changing course of economic history can perhaps be subdivided into economic epochs, each identified by the epochal innovation with the distinctive characteristics of growth that it generated.Without considering the feasibility of identifying and dating such economic epochs, we may proceed on the working assumption that modern economic growth represents such a distinct epoch - growth dating back to the late eighteenth century and limited (except in significant partial effects) to economically developed countries. These countries, so classified because they have managed to take adequate advantage of the potential of modern technology, include most of Europe, the overseas offshoots of Western Europe, and Japan—barely one quarter of world population.”

Cameron (1961) analyzes the mechanism by which the Industrial Revolution in Great Britain spread throughout Europe and Cameron (1967) analyzes the financing by banks of the Industrial Revolution in Great Britain. O’Donoghue and Goulding (2004) provide consumer price inflation in England since 1750 and MacFarlane and Mortimer-Lee (1994) analyze inflation in England over 300 years. Lucas (2004) estimates world population and production since the year 1000 with sustained growth of per capita incomes beginning to accelerate for the first time in English-speaking countries and in particular in the Industrial Revolution in Great Britain. The conventional theory is unequal distribution of the gains from trade and technical progress between the industrialized countries and developing economies (Singer 1950, 478):

“Dismissing, then, changes in productivity as a governing factor in changing terms of trade, the following explanation presents itself: the fruits of technical progress may be distributed either to producers (in the form of rising incomes) or to consumers (in the form of lower prices). In the case of manufactured commodities produced in more developed countries, the former method, i.e., distribution to producers through higher incomes, was much more important relatively to the second method, while the second method prevailed more in the case of food and raw material production in the underdeveloped countries. Generalizing, we may say -that technical progress in manufacturing industries showed in a rise in incomes while technical progress in the production of food and raw materials in underdeveloped countries showed in a fall in prices”

Temin (1997, 79) uses a Ricardian trade model to discriminate between two views on the Industrial Revolution with an older view arguing broad-based increases in productivity and a new view concentration of productivity gains in cotton manufactures and iron:

“Productivity advances in British manufacturing should have lowered their prices relative to imports. They did. Albert Imlah [1958] correctly recognized this ‘severe deterioration’ in the net barter terms of trade as a signal of British success, not distress. It is no surprise that the price of cotton manufactures fell rapidly in response to productivity growth. But even the price of woolen manufactures, which were declining as a share of British exports, fell almost as rapidly as the price of exports as a whole. It follows, therefore, that the traditional ‘old-hat’ view of the Industrial Revolution is more accurate than the new, restricted image. Other British manufactures were not inefficient and stagnant, or at least, they were not all so backward. The spirit that motivated cotton manufactures extended also to activities as varied as hardware and haberdashery, arms, and apparel.”

Phyllis Deane (1968, 96) estimates growth of United Kingdom gross national product (GNP) at around 2 percent per year for several decades in the nineteenth century. The facts that the terms of trade of Great Britain deteriorated during the period of epochal innovation and high rates of economic growth while the income terms of trade of the coffee economy of nineteenth-century Brazil improved at the average yearly rate of 4.0 percent from 1857 to 1906 disprove the hypothesis of weakness of trade as an explanation of relatively lower income and wealth. As Temin (1997) concludes, Britain did pass on lower prices and higher quality the benefits of technical innovation. Explanation of late modernization must focus on laborious historical research on institutions and economic regimes together with economic theory, data gathering and measurement instead of grand generalizations of weakness of trade and alleged neocolonial dependence (Stein and Stein 1970, 134-5):

“Great Britain, technologically and industrially advanced, became as important to the Latin American economy as to the cotton-exporting southern United States. [After Independence in the nineteenth century] Latin America fell back upon traditional export activities, utilizing the cheapest available factor of production, the land, and the dependent labor force.”

Summerhill (2015) contributes momentous solid facts and analysis with an ideal method combining economic theory, econometrics, international comparisons, data reconstruction and exhaustive archival research. Summerhill (2015) finds that Brazil committed to service of sovereign foreign and internal debt. Contrary to conventional wisdom, Brazil generated primary fiscal surpluses during most of the Empire until 1889 (Summerhill 2015, 37-8, Figure 2.1). Econometric tests by Summerhill (2015, 19-44) show that Brazil’s sovereign debt was sustainable. Sovereign credibility in the North-Weingast (1989) sense spread to financial development that provided the capital for modernization in England and parts of Europe (see Cameron 1961, 1967). Summerhill (2015, 3, 194-6, Figure 7.1) finds that “Brazil’s annual cost of capital in London fell from a peak of 13.9 percent in 1829 to only 5.12 percent in 1889. Average rates on secured loans in the private sector in Rio, however, remained well above 12 percent through 1850.” Financial development would have financed diversification of economic activities, increasing productivity and wages and ensuring economic growth. Brazil restricted creation of limited liability enterprises (Summerhill 2015, 151-82) that prevented raising capital with issue of stocks and corporate bonds. Cameron (1961) analyzed how the industrial revolution in England spread to France and then to the rest of Europe. The Société Générale de Crédit Mobilier of Émile and Isaac Péreire provided the “mobilization of credit” for the new economic activities (Cameron 1961). Summerhill (2015, 151-9) provides facts and analysis demonstrating that regulation prevented the creation of a similar vehicle for financing modernization by Irineu Evangelista de Souza, the legendary Visconde de Mauá. Regulation also prevented the use of negotiable bearing notes of the Caisse Générale of Jacques Lafitte (Cameron 1961, 118-9). The government also restricted establishment and independent operation of banks (Summerhill 2015, 183-214). Summerhill (2015, 198-9) measures concentration in banking that provided economic rents or a social loss. The facts and analysis of Summerhill (2015) provide convincing evidence in support of the economic theory of regulation, which postulates that regulated entities capture the process of regulation to promote their self-interest. There appears to be a case that excessively centralized government can result in regulation favoring private instead of public interests with adverse effects on economic activity. The contribution of Summerhill (2015) explains why Brazil did not benefit from trade as an engine of growth—as did regions of recent settlement in the vision of nineteenth-century trade and development of Ragnar Nurkse (1959)—partly because of restrictions on financing and incorporation. Professor Rondo E. Cameron, in his memorable A Concise Economic History of the World (Cameron 1989, 307-8), finds that “from a broad spectrum of possible forms of interaction between the financial sector and other sectors of the economy that requires its services, one can isolate three type-cases: (1) that in which the financial sector plays a positive, growth-inducing role; (2) that in which the financial sector is essentially neutral or merely permissive; and (3) that in which inadequate finance restricts or hinders industrial and commercial development.” Summerhill (2015) proves exhaustively that Brazil failed to modernize earlier because of the restrictions of an inadequate institutional financial arrangement plagued by regulatory capture for self-interest.

There is analysis of the origins of current tensions in the world economy (Pelaez and Pelaez, Financial Regulation after the Global Recession (2009a), Regulation of Banks and Finance (2009b), International Financial Architecture (2005), The Global Recession Risk (2007), Globalization and the State Vol. I (2008a), Globalization and the State Vol. II (2008b), Government Intervention in Globalization (2008c)).

The US Bureau of Economic Analysis (BEA) measures the terms of trade index of the United States quarterly since 1947 and annually since 1929. Chart IID-1 provides the terms of trade of the US quarterly since 1947 with significant long-term deterioration from 150.983 in IQ1947 to 110.202 in IVQ2020, increasing from 109.891 in IVQ2019 and increasing from 107.819 in IIQ2020 and 109.156 in IIIQ2020. The index increased to 112.034 in IQ2021, increasing to 113.485 in IIQ2021. The index increased to 114.488 in IIIQ2021. Significant part of the deterioration occurred from the 1960s to the 1980s followed by some recovery and then stability.

Chart IID-1, United States Terms of Trade Quarterly Index 1947-2021

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&1921=survey&1903=46#reqid=19&step=3&isuri=1&1921=survey&1903=46

Chart IID-1A provides the annual US terms of trade from 1929 to 2020. The index fell from 143.072 in 1929 to 109.211 in 2020. There is decline from 1971 to a much lower plateau.

Chart IID-1A, United States Terms of Trade Annual Index 1929-2020, Annual

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&1921=survey&1903=46#reqid=19&step=3&isuri=1&1921=survey&1903=46

Chart IID-1B provides the US terms of trade index, index of terms of trade of nonpetroleum goods and index of terms of trade of goods. The terms of trade of nonpetroleum goods dropped sharply from the mid-1980s to 1995, recovering significantly until 2014, dropping and then recovering again into 2020. There is relative stability in the terms of trade of nonpetroleum goods from 1967 to 2021 but sharp deterioration in the overall index and the index of goods.

Chart IID-1B, United States Terms of Trade Indexes 1967-2021, Quarterly

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/iTable.cfm?reqid=19&step=3&isuri=1&1921=survey&1903=46#reqid=19&step=3&isuri=1&1921=survey&1903=46

The US Bureau of Labor Statistics (BLS) provides measurements of US international terms of trade. The measurement by the BLS is as follows (https://www.bls.gov/mxp/terms-of-trade.htm):

“BLS terms of trade indexes measure the change in the U.S. terms of trade with a specific country, region, or grouping over time. BLS terms of trade indexes cover the goods sector only.

To calculate the U.S. terms of trade index, take the U.S. all-export price index for a country, region, or grouping, divide by the corresponding all-import price index and then multiply the quotient by 100. Both locality indexes are based in U.S. dollars and are rounded to the tenth decimal place for calculation. The locality indexes are normalized to 100.0 at the same starting point.
TT_t=(LOD_t/LOO_t)*100,
where
TT_t=Terms of Trade Index at time t
LOD_t=Locality of Destination Price Index at time t
LOO_t=Locality of Origin Price Index at time t
The terms of trade index measures whether the U.S. terms of trade are improving or deteriorating over time compared to the country whose price indexes are the basis of the comparison. When the index rises, the terms of trade are said to improve; when the index falls, the terms of trade are said to deteriorate. The level of the index at any point in time provides a long-term comparison; when the index is above 100, the terms of trade have improved compared to the base period, and when the index is below 100, the terms of trade have deteriorated compared to the base period.”

Chart IID-3 provides the BLS terms of trade of the US with Canada. The index increases from 100.0 in Dec 2017 to 117.8 in Dec 2018 and decreases to 104.0 in Feb 2020. The index increases to 121.5 in Apr 2020. The index decreases to 90.6 in Oct 2021.

Chart IID-3, US Terms of Trade, Monthly, All Goods, Canada, NSA, Dec 2017=100

Source: Bureau of Labor Statistics https://www.bls.gov/mxp/data.htm

Chart IID-4 provides the BLS terms of trade of the US with the European Union. There is improvement from 100.0 in Dec 2017 to 102.8 in Jan 2020 followed by move to 104.3 in Oct 2021.

Chart IID-4, US Terms of Trade, Monthly, All Goods, European Union, NSA, Dec 2017=100

Source: Bureau of Labor Statistics https://www.bls.gov/mxp/data.htm

Chart IID-4 provides the BLS terms of trade of the US with Mexico. There is improvement from 100.0 in Dec 2017 to 118.4 in Oct 2021.

Chart IID-5, US Terms of Trade, Monthly, All Goods, Mexico, NSA, Dec 2017=100

Source: Bureau of Labor Statistics https://www.bls.gov/mxp/data.htm

Chart IID-4 provides the BLS terms of trade of the US with China. There is deterioration from 100.0 in Dec 2017 to 98.0 in Sep 2018, improvement to 102.1 in Dec 2020 and 108.1 in Oct 2021.

Chart IID-6, US Terms of Trade, Monthly, All Goods, China, NSA, Dec 2017=100

Source: Bureau of Labor Statistics https://www.bls.gov/mxp/data.htm

Chart IID-4 provides the BLS terms of trade of the US with Japan. There is deterioration from 100.0 in Dec 2017 to 99.2 in Dec 2019 and improvement to 110.0 in Oct 2021.

Chart IID-7, US Terms of Trade, Monthly, All Goods, Japan, NSA, Dec 2017=100

Source: Bureau of Labor Statistics https://www.bls.gov/mxp/data.htm

Manufacturing is underperforming in the lost cycle of the global recession. Manufacturing (NAICS) in Oct 2021 is lower by 6.2 percent relative to the peak in Jun 2007, as shown in Chart V-3A. Manufacturing (SIC) in Oct 2021 at 101.0316 is lower by 8.9 percent relative to the peak at 110.8954 in Jun 2007. There is classic research on analyzing deviations of output from trend (see for example Schumpeter 1939, Hicks 1950, Lucas 1975, Sargent and Sims 1977). The long-term trend is growth of manufacturing at average 3.0 percent per year from Oct 1919 to Oct 2021. Growth at 3.0 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 160.7748 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316 which is 37.2 percent below trend. The underperformance of manufacturing in Mar-Oct 2020 originates partly in the earlier global recession augmented by the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Manufacturing grew at the average annual rate of 3.3 percent between Dec 1986 and Dec 2006. Growth at 3.3 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 106.8161 in Dec 2007 to 167.3750 in Oct 2021. The actual index NSA in Oct 2021 is 101.0316, which is 39.6 percent below trend. Manufacturing output grew at average 1.8 percent between Dec 1986 and Oct 2021. Using trend growth of 1.8 percent per year, the index would increase to 136.7143 in Oct 2021. The output of manufacturing at 101.0316 in Oct 2021 is 26.1 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 108.5167 in Jul 2007 to the low of 84.7321 in May 2009 or 21.9 percent. The NAICS manufacturing index increased from 84.7321 in Apr 2009 to 101.8071 in Oct 2021 or 20.2 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.5 percent from Dec 1986 to Dec 2006. Growth at 3.5 percent would increase the NAICS manufacturing output index from 104.6868 in Dec 2007 to 168.4870 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 39.6 below trend. The NAICS manufacturing output index grew at 1.7 percent annual equivalent from Dec 1999 to Dec 2006. Growth at 1.7 percent would raise the NAICS manufacturing output index from 104.6868 in Dec 2007 to 132.1797 in Oct 2021. The NAICS index at 101.8071 in Oct 2021 is 23.0 percent below trend under this alternative calculation.

Chart V-3A, United States Manufacturing (NAICS) NSA, Dec 2007 to Oct 2021

Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart V-3A, United States Manufacturing (NAICS) NSA, Jun 2007 to Oct 2021

Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart V-3B provides the civilian noninstitutional population of the United States, or those available for work. The civilian noninstitutional population increased from 231.713 million in Jun 2007 to 261.908 million in Oct 2021 or 30.195 million.

Chart V-3B, United States, Civilian Noninstitutional Population, Million, NSA, Jan 2007 to Oct 2021

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart V-3C provides nonfarm payroll manufacturing jobs in the United States from Jan 2007 to Oct 2021. Nonfarm payroll manufacturing jobs fell from 13.987 million in Jun 2007 to 12.536 million in Oct 2021, or 1.451 million.

Chart V-3C, United States, Payroll Manufacturing Jobs, NSA, Jan 2007 to Oct 2021, Thousands

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart V-3D provides the index of US manufacturing (NAICS) from Jan 1972 to Oct 2021. The index continued increasing during the decline of manufacturing jobs after the early 1980s. There are likely effects of changes in the composition of manufacturing with also changes in productivity and trade. There is sharp decline in the global recession, with output in the US reaching a high in Feb 2020 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions), in the lockdown of economic activity in the COVID-19 event and the through in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).

Chart V-3D, United States Manufacturing (NAICS) NSA, Jan 1972 to Oct 2021

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm

Chart V-3E provides the US noninstitutional civilian population, or those in condition of working, from Jan 1948, when first available, to Oct 2021. The noninstitutional civilian population increased from 170.042 million in Jun 1981 to 261.908 million in Oct 2021 or 91.866 million.

Chart V-3E, United States, Civilian Noninstitutional Population, Million, NSA, Jan 1948 to Oct 2021

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Chart V-3F provides manufacturing jobs in the United States from Jan 1939 to Aug 2021. Nonfarm payroll manufacturing jobs decreased from a peak of 18.890 million in Jun 1981 to 12.536 million in Oct 2021.

Chart V-3F, United States, Payroll Manufacturing Jobs, NSA, Jan 1939 to Oct 2021, Thousands

Source: US Bureau of Labor Statistics

https://www.bls.gov/

Table I-13A provides national income without capital consumption by industry with estimates based on the Standard Industrial Classification (SIC). The share of agriculture declines from 8.7 percent in 1948 to 1.7 percent in 1987 while the share of manufacturing declines from 30.2 percent in 1948 to 19.4 percent in 1987. Colin Clark (1957) pioneered the analysis of these trends over long periods.

Table I-13A, US, National Income without Capital Consumption Adjustment by Industry, Annual Rates, Billions of Dollars, % of Total

	1948	% Total	1987	% Total
National Income WCCA	249.1	100.0	4,029.9	100.0
Domestic Industries	247.7	99.4	4,012.4	99.6
Private Industries	225.3	90.4	3,478.8	86.3
Agriculture	21.7	8.7	66.5	1.7
Mining	5.8	2.3	42.5	1.1
Construction	11.1	4.5	201.0	5.0
Manufacturing	75.2	30.2	780.2	19.4
Durable Goods	37.5	15.1	458.4	11.4
Nondurable Goods	37.7	15.1	321.8	8.0
Transportation PUT	21.3	8.5	317.7	7.9
Transportation	13.8	5.5	127.2	3.2
Communications	3.8	1.5	96.7	2.4
Electric, Gas, SAN	3.7	1.5	93.8	2.3
Wholesale Trade	17.1	6.9	283.1	7.0
Retail Trade	28.8	11.6	400.4	9.9
Finance, INS, RE	22.9	9.2	651.7	16.2
Services	21.4	8.6	735.7	18.3
Government	22.4	9.0	533.6	13.2
Rest of World	1.5	0.6	17.5	0.4
	2003.9	11.6	2016.3	11.5
	252.6	1.5	257.9	1.5

Notes: Using 1972 Standard Industrial Classification (SIC). Percentages Calculates from Unrounded Data; WCCA: Without Capital Consumption Adjustment by Industry; RE: Real Estate; PUT: Public Utilities; SAN: Sanitation

Source: US Bureau of Economic Analysis

http://www.bea.gov/iTable/index_nipa.cfm

Table I-13B provides national income without capital consumption estimated based on the 2012 North American Industry Classification (NAICS). The share of manufacturing fell from 14.9 percent in 1998 to 9.5 percent in 2018.

Table I-13B, US, National Income without Capital Consumption Adjustment by Industry, Seasonally Adjusted Annual Rates, Billions of Dollars, % of Total

	1998	% Total	2018	% Total
National Income WCCA	7,744.4	100.0	17,136.5	100.0
Domestic Industries	7,727.0	99.8	16,868.6	98.4
Private Industries	6,793.3	87.7	14,889.6	86.9
Agriculture	72.7	0.9	119.7	0.7
Mining	74.2	1.0	202.7	1.2
Utilities	134.4	1.7	157.7	0.9
Construction	379.2	4.9	902.5	5.3
Manufacturing	1156.4	14.9	1635.3	9.5
Durable Goods	714.9	9.2	964.9	5.6
Nondurable Goods	441.5	5.7	670.4	3.9
Wholesale Trade	512.8	6.6	958.2	5.6
Retail Trade	610.0	7.9	1124.1	6.6
Transportation & WH	246.1	3.2	554.4	3.2
Information	294.3	3.8	629.7	3.7
Finance, Insurance, RE	1280.9	16.5	3058.8	17.8
Professional & Business Services	889.8	11.5	2522.6	14.7
Education, Health Care	607.1	7.8	1764.8	10.3
Arts, Entertainment	290.5	3.8	756.6	4.4
Other Services	244.9	3.3	502.5	2.9
Government	933.7	12.1	1979.0	11.5
Rest of the World	17.4	0.2	267.9	1.6

Notes: Estimates based on 2012 North American Industry Classification System (NAICS). Percentages Calculates from Unrounded Data; WCCA: Without Capital Consumption Adjustment by Industry; WH: Warehousing; RE, includes rental and leasing: Real Estate; Art, Entertainment includes recreation, accommodation and food services; BS: business services

Source: US Bureau of Economic Analysis

http://www.bea.gov/iTable/index_nipa.cfm

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