Friday, January 2, 2026

 I Mediocre economic growth below potential and long-term trend, resulting in idle productive resources with GDP four trillion dollars below trend.  US GDP grew at the average rate of 3.2 percent per year from 1929 to 2024 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2025/10/us-gdp-grew-at-38-percent-saar-in.html and earlier https://cmpassocregulationblog.blogspot.com/2025/09/us-gdp-grew-at-33-percent-saar-in.html), with similar performance in whole cycles of contractions and expansions, but only at 1.5 percent per year on average from 2007 to 2020 and 2.0 percent from 2007 to 2024. GDP in IIIQ2025 is 19.0 percent lower than it would have been had it grown at trend of 3.0 percent

I United States GDP

IA Mediocre Cyclical United States Economic Growth

IA1 Stagnating Real Private Fixed Investment

IA2 Swelling Undistributed Profits

Section IID United States International Terms of Trade

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

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

 

Note: This Blog will post only one indicator of the US economy while we concentrate efforts in completing a book-length manuscript in the critically important subject of INFLATION.

 

Preamble. United States total public debt outstanding is $38.4 trillion and debt held by the public $30.8 trillion (https://fiscaldata.treasury.gov/datasets/debt-to-the-penny/debt-to-the-penny) [Date last updated Dec 30, 2025.] The Federal Reserve Bank of Saint Louis estimates Federal Total Public Debt as percent of GDP at 118.8 in IIQ2025 and Federal Total Public Debt Held by the Public at 95.0 Percent of GDP (https://fred.stlouisfed.org/series/GFDEGDQ188S). [Shutdown affects data: https://news.research.stlouisfed.org/2025/09/a-u-s-government-shutdown-could-delay-some-fred-data-2/] The Net International Investment Position of the United States, or foreign debt, is $26.14 trillion at the end of IIQ2025 (https://www.bea.gov/sites/default/files/2025-09/intinv225.pdf) [Shutdown affects data]. The United States current account deficit is 3.3 percent of nominal GDP in IIQ2025, “down from 5.9 percent in the first quarter” (https://www.bea.gov/sites/default/files/2025-09/trans225.pdf) (Next release Jan 14, 2026) [Shutdown affects data]. The Treasury deficit of the United States reached $1.8 trillion in fiscal year 2024 (https://fiscal.treasury.gov/reports-statements/mts/). Total assets of Federal Reserve Banks reached $6.6 trillion on Dec 24, 2025 and securities held outright reached $6.3 trillion (https://www.federalreserve.gov/releases/h41/current/h41.htm#h41tab1). US GDP nominal NSA reached $30.5 trillion in IIQ2025 (https://apps.bea.gov/iTable/index_nipa.cfm). US GDP contracted at the real seasonally adjusted annual rate (SAAR) of 1.0 percent in IQ2022 and grew at the SAAR of 0.6 percent in IIQ2022, growing at 2.9 percent in IIIQ2022, growing at 2.8 percent in IVQ2022, growing at 2.9 percent in IQ2023, growing at 2.5 percent in IIQ2023 growing at 4.7 percent in IIIQ2023, growing at 3.4 percent in IVQ2023, growing at 0.8 percent in IQ2024, growing at 3.6 percent in IIQ2024, growing at 3.3 percent in IIIQ2024, growing at 1.9 percent in IVQ2024, contracting at 0.6 percent in IQ2025, growing at 3.8 percent in IIQ2025 and growing at 4.3 percent in IIIQ2025 (https://apps.bea.gov/iTable/index_nipa.cfm). [Shutdown affects data] Total Treasury interest-bearing, marketable debt held by private investors increased from $3635 billion in 2007 to $16,439 billion in Sep 2021 (Fiscal Year 2021) or increase by 352.2 percent (https://fiscal.treasury.gov/reports-statements/treasury-bulletin/). John Hilsenrath, writing on “Economists Seek Recession Cues in the Yield Curve,” published in the Wall Street Journal on Apr 2, 2022, analyzes the inversion of the Treasury yield curve with the two-year yield at 2.430 on Apr 1, 2022, above the ten-year yield at 2.374. Hilsenrath argues that inversion appears to signal recession in market analysis but not in alternative Fed approach.

The Consumer Price index of the United States in Chart CPI-H increased 2.7 percent in Nov 2025 Relative to a Year Earlier, The Tenth Highest Since 8.9 percent in Dec 1981 was Followed by the Highest of 9.1 percent in Jun 2022, the Second Highest of 8.6 percent in May 2022, 8.5 percent in both Jul 2022 and Mar 2022, 8.3 percent in both Apr and Aug 2022, 8.2 percent in Sep 2022, 7.7 percent in Oct 2022, 7.1 percent in Nov 2022, 6.5 percent in Dec 2022, 6.4 percent in Jan 2023, 6.0 percent in Feb 2023, 5.0 percent in Mar 2023, 4.9 percent in Apr 2023, 4.0 percent in May 2023, 3.0 percent in Jun 2023, 3.2 percent in Jul 2023, 3.7 percent in Aug 2023, 3.7 percent in Sep 2023, 3.2 percent in Oct 2023, 3.1 percent in Nov 2023, 3.4 percent in Dec 2023, 3.1 percent in Jan 2024, 3.2 percent in Feb 2024, 3.5 percent in Mar 2024, 3.4 percent in Apr 2024, 3.3 percent in May 2024, 3.0 in Jun 2024, 2.9 percent in Jul 2024, 2.5 percent in Aug 2024, 2.4 percent in Sep 2024, 2.6 percent in Oct 2024, 2.7 percent in Nov 2024, 2.9 percent in Dec 2024, 3.0 percent in Jan 2025, 2.8 percent in Feb 2025, 2.4 percent in Mar 2025, 2.3 percent in Apr 2025, 2.4 percent in May 2025, 2.7 percent in Jun 2025, 2.7 percent in Jul 2025, 2.9 percent in Aug 2025, 3.0 percent in Sep 2025, no observations available (NA) for Oct 2025 during the shutdown, and 2.7 percent in Nov 2025.

image

Chart CPI-H, US, Consumer Price Index, 12-Month Percentage Change, NSA, 1981-2025

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

Table CPI-H, US, Consumer Price Index, 12-Month Percentage Change, NSA, 1981-1983, 2019-2025

Year

Jan

Feb

Mar

Apr

May

Jun

Jul

Aug

Sep

Oct

Nov

Dec

1981

11.8

11.4

10.5

10.0

9.8

9.6

10.8

10.8

11.0

10.1

9.6

8.9

1982

8.4

7.6

6.8

6.5

6.7

7.1

6.4

5.9

5.0

5.1

4.6

3.8

1983

3.7

3.5

3.6

3.9

3.5

2.6

2.5

2.6

2.9

2.9

3.3

3.8

2019

1.6

1.5

1.9

2.0

1.8

1.6

1.8

1.7

1.7

1.8

2.1

2.3

2020

2.5

2.3

1.5

0.3

0.1

0.6

1.0

1.3

1.4

1.2

1.2

1.4

2021

1.4

1.7

2.6

4.2

5.0

5.4

5.4

5.3

5.4

6.2

6.8

7.0

2022

7.5

7.9

8.5

8.3

8.6

9.1

8.5

8.3

8.2

7.7

7.1

6.5

2023

6.4

6.0

5.0

4.9

4.0

3.0

3.2

3.7

3.7

3.2

3.1

3.4

2024

3.1

3.2

3.5

3.4

3.3

3.0

2.9

2.5

2.4

2.6

2.7

2.9

2025

3.0

2.8

2.4

2.3

2.4

2.7

2.7

2.9

3.0

NA

2.7

 

 

Chart VII-3 of the Energy Information Administration provides the US retail price of regular gasoline. The price moved to $2.841 per gallon on Dec 29, 2025, from $3.006 a year earlier or minus 6.5 percent.

Gasoline price graphs

https://www.eia.gov/petroleum/weekly/ [Chart discontinued See Weekly Petroleum Status Report.]

Chart VII-3A provides the US retail price of regular gasoline, dollars per gallon, from $1.191 on Aug 20,1990 to $2.811 on Dec 22, 2025 or 136.0 percent. The price of retail regular gasoline increased from $2.249/gallon on Jan 4,2021 to $2.811/gallon on Dec 29, 2025, or 25.0 percent. The price of retail regular gasoline decreased from $3.530/gallon on Feb 21, 2022, two days before the invasion of Ukraine, to $2.811/gallon on Dec 22, 2025 or minus 20.4 percent and had increased 57.0 percent from $2.249/gallon on Jan 4,2021 to $3.530/gallon on Feb 28, 2022.

Chart VII-3A, US Retail Price of Regular Gasoline, Dollars Per Gallon

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=EMM_EPMR_PTE_NUS_DPG&f=W 

Chart VII-4 of the Energy Information Administration provides the price of the Natural Gas Futures Contract increasing from $2.581 per million Btu on Jan 4, 2021 to $5.326 per million Btu on Dec 20, 2022 or 106.4 percent and closing at $1.785 on Apr 5, 2024 or change of minus 66.5 percent.

A graph of gas prices AI-generated content may be incorrect.

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

Source: US Energy Information Administration

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

Chart VII-5 of the US Energy Administration provides US field production of oil moving from a high of 12.983 thousand barrels per day in Dec 2019 to 11.760 thousand barrels per day in Dec 2021 and the final point of 13.870 thousand barrels per day in Oct 2025.

Chart VII-5 United States Field Production of Crude Oil, Thousand Barrels Per Day

Sources: US Energy Information Administration https://www.eia.gov/dnav/pet/hist/leafhandler.ashx?n=pet&s=mcrfpus2&f=m

Chart VII-6 of the US Energy Information Administration provides net imports of crude oil and petroleum products. Net imports changed from 1967 thousand barrels per day in the first week of Dec 2020 to minus -3216 thousand barrels in the fourth week of Oct 25, 2024, minus 3310 thousand barrels in the second week of Dec 13, 2024 and minus 3.773 thousand barrels in the second week of Dec 26, 2025.

 

Chart VII-6, US, Net Imports of Crude Oil and Petroleum Products, Thousand Barrels Per Day

Source: US Energy Information Administration

https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=WTTNTUS2&f=W

Chart VI-7 of the EIA provides US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2022. There was sharp increase in production in the final segment that reached consumption by 2020. There is reversal in 2021 with consumption exceeding production. 

A graph of the number of companies AI-generated content may be incorrect.

Chart VI-7, US Petroleum Consumption, Production, Imports, Exports and Net Imports 1950-2022, Million Barrels Per Day

https://www.eia.gov/energyexplained/oil-and-petroleum-products/imports-and-exports.php

Chart VI-8 provides the US average retail price of electricity at 12.78 cents per kilowatthour in Dec 2020 increasing to 17.98 cents per kilowatthour in Oct 2025 or 40.7 per cent.

Chart VI-8, US Average Retail Price of Electricity, Monthly, Cents per Kilowatthour

https://www.eia.gov/electricity/data/browser/#/topic/7?agg=0,1&geo=g&endsec=vg&linechart=ELEC.PRICE.US-RES.M~~~&columnchart=ELEC.PRICE.US-ALL.M~ELEC.PRICE.US-RES.M~ELEC.PRICE.US-COM.M~ELEC.PRICE.US-IND.M&map=ELEC.PRICE.US-ALL.M&freq=M&start=200101&end=202205&ctype=linechart&ltype=pin&rtype=s&pin=&rse=0&ma

United States manufacturing output from 1919 to 2025 monthly is in Chart I-4 of the Board of Governors of the Federal Reserve System. The second industrial revolution of Jensen (1993) is quite evident in the acceleration of the rate of growth of output given by the sharper slope in the 1980s and 1990s. Growth was robust after the shallow recession of 2001 but dropped sharply during the global recession after IVQ2007. Manufacturing output recovered sharply but has not reached earlier levels and is losing momentum at the margin.  [G.17 October 17th release delayed

The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html]

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 2.8 percent per year from Nov 1919 to Nov 2025. Growth at 2.8 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.5636 in Dec 2007 to 178.0579 in Nov 2025. The actual index NSA in Nov 2025 is 96.9756 which is 45.5 percent below trend. The underperformance of manufacturing in Mar-Nov 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).  Manufacturing output grew at average 1.5 percent between Dec 1999 and Dec 2006. Using trend growth of 1.5 percent per year, the index would increase to 141.7537 in Nov 2025. The output of manufacturing at 96.9756 in Nov 2025 is 31.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 105.8434 in Jun 2007 to the low of 85.6368 in Apr 2009 or 19.1 percent. The NAICS manufacturing index increased from 85.6368 in Apr 2009 to 97.7127 in Nov 2025 or 14.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.4 percent from Dec 1986 to Dec 2006. Growth at 3.4 percent would increase the NAICS manufacturing output index from 106.6125 in Dec 2007 to 194.0744 in Nov 2025. The NAICS index at 97.7127 in Nov 2025 is 49.7 percent 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 105.8434 in Dec 2007 to 144.2034 in Nov 2025. The NAICS index at 97.7127 in Nov 2025 is 32.2 percent below trend under this alternative calculation.

image

Chart I-4, US, Manufacturing Output, 1919-2025

Source: Board of Governors of the Federal Reserve System

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

Chart I-4B provides the data for the period 2007-2025 SIC US Manufacturing. There has not been recovery from the higher levels before the recession from Dec 2007 to Aug 2009 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions). [G.17 October 17th release delayed

The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html] [will be updated in next blog post]

image

Chart I-4B, US, Manufacturing Output, 2007-2025

htps://www.federalreserve.gov/releases/g17/Current/default.htm [will be updated in next blog post]

Chart I-7 of the Board of Governors of the Federal Reserve System shows that output of durable manufacturing accelerated in the 1980s and 1990s with slower growth in the 2000s perhaps because processes matured. Growth was robust after the major drop during the global recession but appears to vacillate in the final segment. There is sharp contraction in Mar-Apr 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). There is initial recovery in May 2020-Oct 2022 with deterioration/weakness and renewed oscillating growth in Nov 2022-Aug 2025.

image

Chart I-7, US, Output of Durable Manufacturing, 1972-2025

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm [G.17 October 17th release delayed The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html]

Chart I-7B provides NAICS Durable Manufacturing from 2007 to 2025. There has not been recovery from the higher levels before the recession from Dec 2007 to Aug 2009 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions). [will be updated in next blog post]

image

Chart I-7B, US, Output of Durable Manufacturing, 2007-2025

Source: Board of Governors of the Federal Reserve System

htps://www.federalreserve.gov/releases/g17/Current/default.htm [will be updated in next blog post]

Chart V-3D provides the index of US manufacturing (NAICS) from Jan 1972 to Aug 2025. 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). [[G.17 October 17th release delayed

The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html]

image

Chart V-3D, United States Manufacturing (NAICS) NSA, Jan 1972 to Aug 2025

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htmh [will be updated in next blog post]

Chart V-3DB provides NAICS Manufacturing from 2007 to 2025. There has not been recovery from the higher levels before the recession from Dec 2007 to Aug 2009 (https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions). [[G.17 October 17th release delayed

The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html]

image

Chart V-3DB, United States Manufacturing (NAICS) NSA, Jan 2007 to Aug 2025

Source: Board of Governors of the Federal Reserve System

https://www.federalreserve.gov/releases/g17/Current/default.htm [[G.17 October 17th release delayed The industrial production indexes that are published in the G.17 Statistical Release on Industrial Production and Capacity Utilization incorporate a range of data from other government agencies, the publication of which has been delayed as a result of the federal government shutdown. Consequently, the G.17 release will not be published as scheduled on October 17, 2025. The Federal Reserve will announce a publication date for the G.17 release after the publication dates of the necessary source data become available. https://www.federalreserve.gov/feeds/g17.html] [will be updated in next blog post]

Chart VII-9 provides the fed funds rate and Three Months, Two-Year and Ten-Year Treasury Constant Maturity Yields. Unconventional monetary policy of near zero interest rates is typically followed by financial and economic stress with sharp increases in interest rates.

image

Chart VII-9, US Fed Funds Rate and Three-Month, Two-Year and Ten-Year Treasury Constant Maturity Yields, Jan 2, 1994 to 2022-2023

Source: Federal Reserve Board of the Federal Reserve System

https://www.federalreserve.gov/releases/h15/

            Note: program does not download the entire right-side of the chart.

image

Chart VII-9A, US Fed Funds Rate and Three-Month, Two-Year and Ten-Year Treasury Constant Maturity Yields, Jan 2, 2022 to May 30, 2023

Source: Federal Reserve Board of the Federal Reserve System

https://www.federalreserve.gov/releases/h15/

Note: Chart is shortened of current dates in download.

Chart VI-14 provides the overnight fed funds rate, the yield of the 10-year Treasury constant maturity bond, the yield of the 30-year constant maturity bond and the conventional mortgage rate from Jan 1991 to Dec 1996. In Jan 1991, the fed funds rate was 6.91 percent, the 10-year Treasury yield 8.09 percent, the 30-year Treasury yield 8.27 percent and the conventional mortgage rate 9.64 percent. Before monetary policy tightening in Oct 1993, the rates and yields were 2.99 percent for the fed funds, 5.33 percent for the 10-year Treasury, 5.94 for the 30-year Treasury and 6.83 percent for the conventional mortgage rate. After tightening in Nov 1994, the rates and yields were 5.29 percent for the fed funds rate, 7.96 percent for the 10-year Treasury, 8.08 percent for the 30-year Treasury and 9.17 percent for the conventional mortgage rate.

Chart VI-14, US, Overnight Fed Funds Rate, 10-Year Treasury Constant Maturity, 30-Year Treasury Constant Maturity and Conventional Mortgage Rate, Monthly, Jan 1991 to Dec 1996

Source: Board of Governors of the Federal Reserve System

http://www.federalreserve.gov/releases/h15/update/

Chart VI-15 of the Bureau of Labor Statistics provides the all items consumer price index from Jan 1991 to Dec 1996. There does not appear acceleration of consumer prices requiring aggressive tightening.

image

Chart VI-15, US, Consumer Price Index All Items, Jan 1991 to Dec 1996

Source: Bureau of Labor Statistics

https://www.bls.gov/cpi/data.htm

Chart IV-16 of the Bureau of Labor Statistics provides 12-month percentage changes of the all items consumer price index from Jan 1991 to Dec 1996. Inflation collapsed during the recession from Jul 1990 (III) and Mar 1991 (I) and the end of the Kuwait War on Feb 25, 1991 that stabilized world oil markets. CPI inflation remained almost the same and there is no valid counterfactual that inflation would have been higher without monetary policy tightening because of the long lag in effect of monetary policy on inflation (see Culbertson 1960, 1961, Friedman 1961, Batini and Nelson 2002, Romer and Romer 2004). Policy tightening had adverse collateral effects in the form of emerging market crises in Mexico and Argentina and fixed income markets worldwide.

image

Chart VI-16, US, Consumer Price Index All Items, Twelve-Month Percentage Change, Jan 1991 to Dec 1996

Source: Bureau of Labor Statistics

https://www.bls.gov/cpi/data.htm

 

Chart USFX provides the exchange rate of US Dollars per EURO from 2007 to 2023. Barry Eichengreen and Jeffrey Sachs, Exchange Rates and Economic Recovery in the 1930s, The Journal of Economic History, Vol. 45, No. 4 (Dec 1985), argue that foreign exchange “depreciation was clearly beneficial for initiating countries” during the Great Depression of the 1930s and that it was no equivalent to “beggar my neighbor” policies such as tariffs.

image\

Chart USFX, Exchange Rate USD/EURO 2007-2023

Source: https://www.federalreserve.gov/releases/h10/current/

clip_image002

Chart USFX, Exchange Rate USD/EURO 2000-2023

Source: https://www.federalreserve.gov/releases/h10/current/

Federal Reserve Bank of St. Louis https://fred.stlouisfed.org/

clip_image004

Chart USFX, Exchange Rate USD/EURO 2018-2023

Source: https://www.federalreserve.gov/releases/h10/current/

Federal Reserve Bank of St. Louis https://fred.stlouisfed.org/

Table USFX provides the rate of USD/EURO in selected months. The dollar appreciated sharply from USD 1.2254 on Jan 4, 2021 to 1.0787 on Aug 25, 2023 and 1.1766 on Dec 26, 2025.

Table USFX, USD/EURO Selected Months

Date

USD/EUR

1/4/2021

1.2254

1/5/2021

1.2295

1/6/2021

1.229

1/7/2021

1.2265

1/8/2021

1.2252

1/11/2021

1.2169

1/12/2021

1.2168

1/13/2021

1.2159

1/14/2021

1.2156

1/15/2021

1.2099

1/31/2023

1.0858

2/1/2023

1.0917

2/2/2023

1.0918

2/3/2023

1.0825

2/6/2023

1.0722

2/7/2023

1.0705

2/8/2023

1.0734

2/9/2023

1.0761

2/10/2023

1.0670

2/13/2023

1.0718

2/14/2023

1.0722

2/15/2023

1.0683

2/16/2023

1.0684

2/17/2023

1.0678

2/24/2023

1.0545

3/03/2023

1.0616

3/10/2023

1.0659

3/17/2023

1.0647

3/24/2023

1.0762

3/31/2023

1.0872

4/7/2023

1.0913

4/14/2023

1.0980

4/21/2023

1.0973

4/28/2023

1.1040

5/5/2023

1.1026

5/26/2023

1.0713

6/2/2023

1.0724

6/9/2023

1.0749

6/16/2023

1.0925

6/23/2023

1.0887

6/30/2023

1.0920

7/7/2023

1.0964

7/14/2023

1.1237

7/21/2023

1.1120

7/28/2023

1.1039

8/4/2023

1.1036

8/11/2023

1.0957

8/18/2023

1.0875

8/25/2023

1.0787

9/1/223

1.0787

9/8/2023

1.0709

9/15/2023

1.0673

9/22/2023

1.0660

9/29/2023

1.0584

10/6/2023

1.0596

10/13/2023

1.0502

10/20/2023

1.0592

10/27/2023

1.0592

11/3/2023

1.0733

11/10/2023

1.0710

11/17/2023

1.0879

11/24/2023

1.0934

12/1/2023

1.0878

12/8/2023

1.0746

12/15/2023

1.0906

6/21/2024

1.0694

2/7/2025

1.0329

12/26/2025

1.1766

Source: https://www.federalreserve.gov/releases/h10/current/

U.S. International Trade in Goods and Services September 2025

September 2025

-$52.8 B

August 2025

-$59.3 B

The U.S. goods and services trade deficit decreased in September 2025 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $59.3 billion in August (revised) to $52.8 billion in September, as exports increased more than imports. The goods deficit decreased $7.1 billion in September to $79.0 billion. The services surplus decreased $0.6 billion in September to $26.2 billion.

  • Current release: December 11, 2025
  • Next release: January 8, 2026

 

 

Goods and Services Trade Deficit: Seasonally adjusted

.S. International Trade in Goods and Services September 2025

September 2025

-$52.8 B

August 2025

-$59.3 B

The U.S. goods and services trade deficit decreased in September 2025 according to the U.S. Bureau of Economic Analysis and the U.S. Census Bureau. The deficit decreased from $59.3 billion in August (revised) to $52.8 billion in September, as exports increased more than imports. The goods deficit decreased $7.1 billion in September to $79.0 billion. The services surplus decreased $0.6 billion in September to $26.2 billion.

  • Current release: December 11, 2025
  • Next release: January 8, 2026

 

 

Source: https://www.bea.gov/data/intl-trade-investment/international-trade-goods-and-services   [Data are not being updated during shutdown.]

A comprehensive analysis of the Mill-Bickerdike theorem and the Lerner theorem on tariffs and international terms of trade with application to the Brazilian coffee support program, the recovery of Brazil from the Great Depression and Brazil’s industrialization is in Carlos Manuel Pelaez, História da Industrialização Brasileira. Rio de Janeiro, APEC Editora, 1972.

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 with the new base of 2017. 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 2021. There is relative stability in the terms of trade of nonpetroleum goods from 1967 to 2025 but sharp deterioration in the overall index and the index of goods.

A graph of a graph showing the growth of the stock market AI-generated content may be incorrect.

Chart IID-1B, United States Terms of Trade Indexes 1967-2025, Quarterly

Source: Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm [Data are not being updated during shutdown.]

Percentage shares of net trade (exports less imports), exports and imports in US Gross Domestic Product are in Chart IA1-14 from 1979 to 2025. 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 IA1-14, US, Percentage Shares of Net Trade, Exports and Imports in Gross Domestic Product, Quarterly, 1979-2025

Source: US Bureau of Economic Analysis

https://apps.bea.gov/iTable/index_nipa.cfm  [Data are not being updated during shutdown.]

Table B provides the exchange rate of Brazil and the trade balance from 1927 to 1939. “Currency depreciation in the 1930s…benefitted the initiating countries…There can be no presumption that depreciation was beggar-thy-neighbor…competitive devaluation taken by a group of countries had they been even more widely adopted and coordinated internationally would have hasted recovery from the Great Depression,” Barry Eichengreen and Jeffrey Sachs, “Exchange Rates and Economic Recovery in the1930s,” Journal of Economic History, Vol. 45, No. 4 (Dec., 1985), pp.925-946.

Table B, Brazil, Exchange Rate and Trade Balance, 1927-1939

Year

Exchange Rate

Mil-Réis per £

Trade Balance 1000 Contos

1927

40.6

370.9

1928

40.3

275.3

1929

40.6

332.7

1930

49.4

563.6

1931

62.4

1517.2

1932

48.1

1018.1

1933

52.6

655

1934

59.7

956.2

1935

57.9

248.1

1936

58.4

626.8

1937

56.9

-222.5

1938

57.6

-98.7

1939

71.1

631.9

Source: Carlos Manuel Peláez, Análise Econômica do Programa Brasileiro de Sustentação do Café 1906-1945: Teoria, Política e Medição, Revista Brasileira de Economia, Vol. 25, N 4, Out/Dez 1971, 5-213.

Christina D. Romer argues that growth of the money stock was critical in the recovery of the United States from the Great Depression (Christina D. Romer, What ended the Great Depression? The Journal of Economic History, Volume 52, Number 4, Dec 1992, pp 757-784).

Table C, Brazil, Yearly Percentage Changes of the Money Stock, M1 and M2, Exchange Rate, Terms of Trade, Industrial Production, Real Gross National Product and Real Gross Income Per Capita, 1930-1939

Period

M1

M2

Exchange Rate

Terms of Trade

Industrial Production

Real GNP

Real Gross Income Per Capita

1929/30

-9

-4

22

-34

-5

-1

-10

1930/31

4

1

26

-5

8

-3

-6

1931/32

15

7

-23

8

0

6

2

1932/33

10

4

10

-15

16

10

7

1933/34

5

6

13

5

13

7

5

1934/35

7

8

-3

-28

14

1

-4

1935/36

10

11

1

2

14

12

9

1936/37

10

9

-3

2

7

3

0

1937/38

19

13

1

-11

6

4

-1

1938/39

0

8

23

-12

14

4

2

Source: Carlos Manuel Peláez and Wilson Suzigan, História Monetária do Brasil. Segunda Edição Revisada e Ampliada. Coleção Temas Brasileiros, Universidade de Brasília, 1981.

“In the period of the free coffee market 1857-1906, international coffee prices fluctuated in cycles of increasing amplitude. British export prices decreased at a low average rate, and physical exports of coffee by Brazil increased at the average rate of 2.9 percent per year. The income terms of trade of the coffee economy of Brazil improved at the average compound rate of 4.0 percent per year. But the actual rate must have been much higher because of drastic improvements in the quality of manufactures while the quality of coffee remained relatively constant,” Carlos Manuel Peláez, “The Theory and Reality of Imperialism in the Coffee Economy of Nineteenth-Century Brazil,” The Economic History Review, Second Series, Volume XXIX, No. 2, May 1976. 276-290. See Carlos Manuel Peláez, “A Comparison of Long-Term Monetary Behavior and Institutions in Brazil, Europe and the United States,” The Journal of European Economic History, Volume 5, Number 2, Fall 1976, 439-450, Presented at the Sixth International Congress of Economic History, Section on Monetary Inflation in Historical Perspective, Copenhagen, 22 Aug 1974.

In his classic restatement of the Keynesian demand function in terms of “liquidity preference as behavior toward risk,” James Tobin (http://www.nobelprize.org/nobel_prizes/economic-sciences/laureates/1981/tobin-bio.html) identifies the risks of low interest rates in terms of portfolio allocation (Tobin 1958, 86):

“The assumption that investors expect on balance no change in the rate of interest has been adopted for the theoretical reasons explained in section 2.6 rather than for reasons of realism. Clearly investors do form expectations of changes in interest rates and differ from each other in their expectations. For the purposes of dynamic theory and of analysis of specific market situations, the theories of sections 2 and 3 are complementary rather than competitive. The formal apparatus of section 3 will serve just as well for a non-zero expected capital gain or loss as for a zero expected value of g. Stickiness of interest rate expectations would mean that the expected value of g is a function of the rate of interest r, going down when r goes down and rising when r goes up. In addition to the rotation of the opportunity locus due to a change in r itself, there would be a further rotation in the same direction due to the accompanying change in the expected capital gain or loss. At low interest rates expectation of capital loss may push the opportunity locus into the negative quadrant, so that the optimal position is clearly no consols, all cash. At the other extreme, expectation of capital gain at high interest rates would increase sharply the slope of the opportunity locus and the frequency of no cash, all consols positions, like that of Figure 3.3. The stickier the investor's expectations, the more sensitive his demand for cash will be to changes in the rate of interest (emphasis added).”

Tobin (1969) provides more elegant, complete analysis of portfolio allocation in a general equilibrium model. The major point is equally clear in a portfolio consisting of only cash balances and a perpetuity or consol. Let g be the capital gain, r the rate of interest on the consol and re the expected rate of interest. The rates are expressed as proportions. The price of the consol is the inverse of the interest rate, (1+re). Thus, g = [(r/re) – 1]. The critical analysis of Tobin is that at extremely low interest rates there is only expectation of interest rate increases, that is, dre>0, such that there is expectation of capital losses on the consol, dg<0. Investors move into positions combining only cash and no consols. Valuations of risk financial assets would collapse in reversal of long positions in carry trades with short exposures in a flight to cash. There is no exit from a central bank created liquidity trap without risks of financial crash and another global recession. 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 (Friedman 1957). According to a subsequent statement: “The basic idea is simply that individuals live for many years and that therefore the appropriate constraint for consumption 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→∞. Unconventional monetary policy lowers interest rates to increase the present value of cash flows derived from projects of firms, creating the impression of long-term increase in net worth. An attempt to reverse unconventional monetary policy necessarily causes increases in interest rates, creating the opposite perception of declining net worth. As r→∞, W = Y/r →0. There is no exit from unconventional monetary policy without increasing interest rates with resulting pain of financial crisis and adverse effects on production, investment and employment.

Inflation and unemployment in the period 1966 to 1985 is analyzed by Cochrane (2011Jan, 23) by means of a Phillips circuit joining points of inflation and unemployment. Chart VI-1B for Brazil in Pelaez (1986, 94-5) was reprinted in The Economist in the issue of Jan 17-23, 1987 as updated by the author. Cochrane (2011Jan, 23) argues that the Phillips circuit shows the weakness in Phillips curve correlation. The explanation is by a shift in aggregate supply, rise in inflation expectations or loss of anchoring. The case of Brazil in Chart VI-1B cannot be explained without taking into account the increase in the fed funds rate that reached 22.36 percent on Jul 22, 1981 (http://www.federalreserve.gov/releases/h15/data.htm) in the Volcker Fed that precipitated the stress on a foreign debt bloated by financing balance of payments deficits with bank loans in the 1970s. The loans were used in projects, many of state-owned enterprises with low present value in long gestation. The combination of the insolvency of the country because of debt higher than its ability of repayment and the huge government deficit with declining revenue as the economy contracted caused adverse expectations on inflation and the economy.  This interpretation is consistent with the case of the 24 emerging market economies analyzed by Reinhart and Rogoff (2010GTD, 4), concluding that “higher debt levels are associated with significantly higher levels of inflation in emerging markets. Median inflation more than doubles (from less than seven percent to 16 percent) as debt rises frm the low (0 to 30 percent) range to above 90 percent. Fiscal dominance is a plausible interpretation of this pattern.”

The reading of the Phillips circuits of the 1970s by Cochrane (2011Jan, 25) is doubtful about the output gap and inflation expectations:

“So, inflation is caused by ‘tightness’ and deflation by ‘slack’ in the economy. This is not just a cause and forecasting variable, it is the cause, because given ‘slack’ we apparently do not have to worry about inflation from other sources, notwithstanding the weak correlation of [Phillips circuits]. These statements [by the Fed] do mention ‘stable inflation expectations. How does the Fed know expectations are ‘stable’ and would not come unglued once people look at deficit numbers? As I read Fed statements, almost all confidence in ‘stable’ or ‘anchored’ expectations comes from the fact that we have experienced a long period of low inflation (adaptive expectations). All these analyses ignore the stagflation experience in the 1970s, in which inflation was high even with ‘slack’ markets and little ‘demand, and ‘expectations’ moved quickly. They ignore the experience of hyperinflations and currency collapses, which happen in economies well below potential.”

Yellen (2014Aug22) states that “Historically, slack has accounted for only a small portion of the fluctuations in inflation. Indeed, unusual aspects of the current recovery may have shifted the lead-lag relationship between a tightening labor market and rising inflation pressures in either direction.”

Chart VI-1B provides the tortuous Phillips Circuit of Brazil from 1963 to 1987. There were no reliable consumer price index and unemployment data in Brazil for that period. Chart VI-1B used the more reliable indicator of inflation, the wholesale price index, and idle capacity of manufacturing as a proxy of unemployment in large urban centers.

 

Diagram Description automatically generated

Chart VI1-B, Brazil, Phillips Circuit, 1963-1987

Source: ©Carlos Manuel Pelaez, O Cruzado e o Austral: Análise das Reformas Monetárias do Brasil e da Argentina. São Paulo: Editora Atlas, 1986, pages 94-5. Reprinted in: Brazil. Tomorrow’s Italy, The Economist, 17-23 January 1987, page 25.

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026.

 

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 19.0 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Section IA2 Swelling Undistributed Profits analyzes 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:

and earlier http://cmpassocregulationblog.blogspot.com/2015/07/fluctuating-risk-financial-assets.html and earlier http://cmpassocregulationblog.blogspot.com/2015/06/fluctuating-financial-asset-valuations.html and earlier http://cmpassocregulationblog.blogspot.com/2015/05/fluctuating-valuations-of-financial.html and earlier http://cmpassocregulationblog.blogspot.com/2015/04/global-portfolio-reallocations-squeeze.html and earlier http://cmpassocregulationblog.blogspot.com/2015/03/impatience-with-monetary-policy-of.html and earlier (http://cmpassocregulationblog.blogspot.com/2015/02/world-financial-turbulence-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2015/01/exchange-rate-conflicts-squeeze-of.html and earlier http://cmpassocregulationblog.blogspot.com/2014/12/patience-on-interest-rate-increases.html and earlier http://cmpassocregulationblog.blogspot.com/2014/11/squeeze-of-economic-activity-by-carry.html and earlier http://cmpassocregulationblog.blogspot.com/2014/10/imf-view-squeeze-of-economic-activity.html and earlier http://cmpassocregulationblog.blogspot.com/2014/09/world-inflation-waves-squeeze-of.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.” The BEA provided the annual update of the national accounts in the third estimate of IIIQ2021 GDP (https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd.pdf): “Annual Update of the National Economic Accounts Today’s release presents results from the Annual Update of the National Economic Accounts (NEAs), which includes the National Income and Product Accounts (NIPAs) as well as the Industry Economic Accounts. The update includes revised estimates for the first quarter of 2017 through the first quarter of 2022 and resulted in revisions to GDP, GDP by industry, GDI, and their major components. The reference year remains 2012. More information on the 2022 Annual Update is found in the "Preview of the 2022 Annual Update of the National Economic Accounts" in the May Survey of Current Business. With today's release, most NIPA tables are available through BEA’s Interactive Data application on the BEA website (www.bea.gov). Refer to Information on Updates to the National Economic Accounts for the complete table release schedule and a summary of results through 2021, 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 November 2022 Survey of Current Business will contain an article describing the update in more detail. The updated estimates show that real GDP increased at an average annual rate of 2.1 percent from 2016 to 2021, 0.2 percentage point higher than the previously published estimate. Over the same period, real GDI also increased 2.1 percent, 0.2 percentage point lower than previously published. The average of real GDP and real GDI over the same period was 2.1 percent, the same as previously published. 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 18.2 percent, 1.0 percentage point higher than previously published. For the period of economic expansion from the second quarter of 2020 through the first quarter of 2022, real GDP increased at an annual rate of 8.1 percent, 0.2 percentage point higher than previously estimated.”

            The Bureau of Economic Analysis provides comprehensive update of the National Income and Product Accounts (NIPAs) incorporated in the Third Estimate of GDP for IIQ2023 (https://www.bea.gov/sites/default/files/2023-09/gdp2q23_3rd.pdf): “Comprehensive Update of the National Economic Accounts Today’s release presents results from the comprehensive update of the National Economic Accounts (NEAs), which include the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts (IEAs). The update includes revised statistics for GDP, GDP by industry, GDI, and their major components. Current-dollar measures of GDP and related components are revised from the first quarter of 2013 through the first quarter of 2023. GDI and selected income components are revised from the first quarter of 1979 through the first quarter of 2023. The reference year for chain-type quantity and price indexes and for the chain-dollar estimates is updated to 2017 from 2012. More information on the 2023 Comprehensive Update is found in the "Preview of the 2023 Comprehensive Update of the National Economic Accounts" in the Survey of Current Business. With today's release, most data are available through BEA’s Interactive Data application on the BEA website (www.bea.gov). Refer to “Information on Updates to the National Economic Accounts” for the complete table release schedule and a summary of results through 2022, which includes information on 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. An article describing the update in more detail will be forthcoming in the Survey of Current Business. Additional GDP by industry statistics will be released this fall. BEA will send an advisory with the exact date and time when available.”

            The Bureau of Economic Analysis provides comprehensive update of the National Income and Product Accounts (NIPAs) incorporated in the Third Estimate of GDP for IIQ2024 (https://www.bea.gov/sites/default/files/2024-09/gdp2q24-3rd.pdf): “Annual Update of the National Economic Accounts Today’s release presents results from the annual update of the National Economic Accounts (NEAs), which include the National Income and Product Accounts (NIPAs) and the Industry Economic Accounts (IEAs). The update includes revised estimates for the first quarter of 2019 through the first quarter of 2024 and resulted in revisions to GDP, GDP by industry, GDI, and their major components. The reference year remains 2017. With today's release, most data are available through BEA’s Interactive Data application on the BEA website (www.bea.gov). Refer to “Information on 2024 Annual Updates to the National, Industry, and State and Local Economic Accounts” for the complete table release schedule and a summary of results through 2023, which includes information on 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. An article describing the update in more detail will be forthcoming in the Survey of Current Business.”

            The third estimate of GDP for IIIQ2025 provides Update of  the National Economic Accounts (https://www.bea.gov/sites/default/files/2025-09/gdp2q25-3rd.pdf): “Due to the recent government shutdown, this initial report for the third quarter of 2025 replaces the

release of the advance estimate originally scheduled for October 30 and the second estimate originally scheduled for November 26.”

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 1.6 percent in 2011, 2.3 percent in 2012, 2.1 percent in 2013, 2.5 percent in 2014 and 2.9 percent in 2015. GDP growth was 1.8 percent in 2016 and 2.5 percent in 2017. GDP growth was 3.0 percent in 2018 and 2.6 percent in 2019. GDP contracted 2.1 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). GDP grew 6.2 percent in 2021 and grew 2.5 percent in 2022. GDP grew 2.9 percent in 2023. GDP grew 2.8 percent in 2024. The following calculations show that actual growth is around 2.4 percent per year during the expansion phase. The rate of growth of 2.0 percent in the entire cycle from 2006 to 2024 and 2.0 percent from 2007 to 2024 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. 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 2.4 percent per year. Table Summary GDP provides the data.

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

 

GDP

 

Long-Term

 

 

1929-2024

3.2

 

1947-2024

3.1

 

Whole Cycles

 

 

1980-1989

3.5

 

2006-2024

2.0

 

2007-2024

2.0

 

Cyclical Contractions ∆%

 

 

IQ1980 to IIIQ1980, IIIQ1981 to IVQ1982

-4.6

 

IVQ2007 to IIQ2009

-3.8

 

 

Real Disposable Income

Real Disposable Income per Capita

Long-Term

 

 

1929-2024

3.1

2.0

1947-1999

3.6

2.3

Whole Cycles

 

 

1980-1989

3.5

2.5

2006-2024

2.3

1.6

Source: 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 quarters from IQ2024 to IIIQ2025. Growth has been fluctuating. The final data point is 4.3 percent in IIIQ2025, 3.8 percent in in IIQ2025, minus 0.6 percent in IQ2025, 1.9 percent in IVQ2024, 3.3 percent in IIIQ2024, after 3.6 percent in IIQ2024, after 0.8 percent in IQ2024, 3.4 percent in IVQ2023, 4.7 percent in IIIQ2023, after 2.5 percent in IIQ2023, 2.9 percent in IQ2023 after 2.8 percent in IVQ2022, 2.9 percent in IIIQ2022, 0.6 percent in IIQ2022 and minus 1.0 percent in IQ2022, 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). There are now two consecutive quarters of GDP contraction in the US followed by four consecutive quarters of slower expansion and acceleration in IIIQ2023 and slower growth in IVQ2023 and IQ2024 with improvement in IIQ2024 and IIIQ2024 and slower in IVQ2024 followed by contraction in IQ2025 and acceleration in IIQ2025 and IIIQ2025.

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 26.3 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). 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 second 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 third estimate for IIQ2022 with the annual update (https://www.bea.gov/sites/default/files/2022-09/gdp2q22_3rd.pdf). There is a third estimate for IVQ2022 (https://www.bea.gov/sites/default/files/2023-03/gdp4q22_3rd.pdf). There is a third estimate for IQ2023 (https://www.bea.gov/sites/default/files/2023-06/gdp1q23_3rd.pdf). There is a first estimate for IIQ2023 with the annual update (https://www.bea.gov/sites/default/files/2023-09/gdp2q23_3rd.pdf). There is a third estimate for IVQ2023 (https://www.bea.gov/sites/default/files/2024-03/gdp4q23-3rd.pdf). There is a third estimate for IQ2024 (https://www.bea.gov/sites/default/files/2024-06/gdp1q24-3rd.pdf). There is a third estimate of IIQ2024 with revision from 2019 to 2024 (https://www.bea.gov/sites/default/files/2024-09/gdp2q24-3rd.pdf). There is a new third estimate for IIIQ2024 (https://www.bea.gov/sites/default/files/2024-12/gdp3q24-3rd.pdf). There is a third estimate for IVQ2024 (https://www.bea.gov/sites/default/files/2025-03/gdp4q24-3rd.pdf). There is a third estimate for IQ2025 (https://www.bea.gov/sites/default/files/2025-06/gdp1q25-3rd.pdf). There is a third estimate for IIQ2025 (https://www.bea.gov/sites/default/files/2025-09/gdp2q25-3rd.pdf). There is a first estimate for IIIQ2025 ( https://www.bea.gov/sites/default/files/2025-12/gdp3q25-ini.pdfIIIQ2025). 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 ninety-nine quarters of expansion from IQ1983 to IQ1998, 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, 6.3, 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, 5.6, 3.9, 5.5, 2.4, 4.7, 1.4, 1.2, 3.5, 2.7, 3.0, 6.8, 3.6 in IIIQ1996, 4.2 in IVQ1996, 2.6 in IQ1997, 6.8 percent in IIQ1997, 5.1 percent in IIIQ1997, 3.5 percent in IVQ1997, 4.1 percent in IQ1998, 3.8 percent in IIQ1998, 5.1 percent in IIIQ 1998 and 6.6 percent in IVQ1998. 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 sixty five quarters of expansion from IIIQ2009 to IIQ2025 shown in relief in Table I-2 were mediocre: 1.4, 4.4, 1.9, 3.9, 3.1, 2.1, -0.9, 2.7, -0.1, 4.6, 3.4, 1.8, 0.6, 0.5, 4.0, 1.1, 3.5, 3.5, minus 1.4, 5.3, 5.0, 2.0, 3.6, 2.5, 1.6, 0.7, 2.3, 1.3, 2.9, 2.2, 2.0, 2.3, 3.2, 4.6, 3.3, 2.1, 2.5, 0.6, 2.5, 3.4, 4.8, 2.8, minus 5.2, minus 28.0, 34.9 in IIIQ2020, 4.6, 5.7, 7.0, 3.3, 7.0, minus 1.0 in IQ2022, 0.6 in IIQ2022, 2.9 in IIIQ2022, 2.8 in IVQ2022, 2.9 in IQ023, 2.5 in IIQ2023, 4.7 in IIIQ2023, 3.4 percent in IVQ2023, 0.8 percent in IQ2024, 3.6 percent in IIQ2024, 3.3 in IIIQ2024, 1.9 percent in IVQ2024, minus 0.6 percent in IQ2015, 3.8 percent in IIQ2025 and 4.3 in IIIQ2025. 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 trough 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

-1.7

-4.5

1.9

II

-2.9

1.8

9.4

7.1

2.4

-0.7

3.9

III

4.9

-1.5

8.2

3.9

-2.1

1.4

3.1

IV

-4.3

0.2

8.6

3.3

-8.5

4.4

2.1

 

 

 

 

1985

 

 

2011

I

 

 

 

3.9

 

 

-0.9

II

 

 

 

3.6

 

 

2.7

III

 

 

 

6.3

 

 

-0.1

IV

 

 

 

3.0

 

 

4.6

 

 

 

 

1986

 

 

2012

I

 

 

 

3.8

 

 

3.4

II

 

 

 

1.8

 

 

1.8

III

 

 

 

3.9

 

 

0.6

IV

 

 

 

2.2

 

 

0.5

 

 

 

 

1987

 

 

2013

I

 

 

 

3.0

 

 

4.0

II

 

 

 

4.4

 

 

1.1

III

 

 

 

3.5

 

 

3.5

IV

 

 

 

7.0

 

 

3.5

 

 

 

 

1988

 

 

2014

I

 

 

 

2.1

 

 

-1.4

II

 

 

 

5.4

 

 

 5.3

III

 

 

 

2.4

 

 

 5.0

IV

 

 

 

5.4

 

 

 2.0

 

 

 

 

1989

 

 

2015

I

 

 

 

4.1

 

 

3.6

II

 

 

 

3.1

 

 

2.5

III

 

 

 

3.0

 

 

1.6

IV

 

 

 

0.8

 

 

0.7

 

 

 

 

1990

 

 

2016

I

 

 

 

4.4

 

 

2.3

II

 

 

 

1.5

 

 

1.3

III

 

 

 

0.3

 

 

2.9

IV

 

 

 

-3.6

 

 

2.2

 

 

 

 

1991

 

 

2017

I

 

 

 

-1.9

 

 

2.0

II

 

 

 

3.2

 

 

2.3

III

 

 

 

2.0

 

 

3.2

IV

 

 

 

1.4

 

 

4.6

 

 

 

 

1992

 

 

2018

I

 

 

 

4.9

 

 

3.3

II

 

 

 

4.4

 

 

2.1

III

 

 

 

4.0

 

 

2.5

IV

 

 

 

4.2

 

 

0.6

 

 

 

 

1993

 

 

2019

I

 

 

 

0.7

 

 

2.5

II

 

 

 

2.3

 

 

3.4

III

 

 

 

1.9

 

 

4.8

IV

 

 

 

5.6

 

 

2.8

 

 

 

 

1994

 

 

2020

I

 

 

 

3.9

 

 

-5.2

II

 

 

 

5.5

 

 

-28.0

III

 

 

 

2.4

 

 

34.9

IV

 

 

 

4.7

 

 

4.6

 

 

 

 

1995

 

 

2021

 

 

 

 

1.4

 

 

5.7

 

 

 

 

1.2

 

 

7.0

 

 

 

 

3.5

 

 

3.3

 

 

 

 

2.7

 

 

7.0

 

 

 

 

1996

 

 

2022

 

 

 

 

3.0

 

 

-1.0

 

 

 

 

6.8

 

 

0.6

 

 

 

 

3.6

 

 

2.9

 

 

 

 

4.2

 

 

2.8

 

 

 

 

1997

 

 

2023

 

 

 

 

2.6

 

 

2.9

 

 

 

 

6.8

 

 

2.5

 

 

 

 

5.1

 

 

4.7

 

 

 

 

3.5

 

 

3.4

 

 

 

 

1998

 

 

2024

 

 

 

 

4.1

 

 

0.8

 

 

 

 

3.8

 

 

3.6

 

 

 

 

5.1

 

 

3.3

 

 

 

 

6.6

 

 

1.9

 

 

 

 

1999

 

 

2025

 

 

 

 

3.8

 

 

-0.6

 

 

 

 

3.4

 

 

3.8

 

 

 

 

5.4

 

 

4.3

 

 

 

 

6.7

 

 

 

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 2024. 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). The average rate of growth from 1947 to 2024 is 3.1 percent.

Chart I-1A, US, Real GDP 1929-2024

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 2025. 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 2024 is 3.1 percent. The annual equivalent growth rate from IVQ2007 to IIQ2025 is only 2.0 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, IIIQ2021 and IVQ2021. There is contraction in IQ2022 and slow growth in IIQ2022. There is expansion in IIIQ2022, IVQ2022, IQ2023 and IIQ2023. There is acceleration in IIIQ2023, growth in IVQ2023, slowing in IQ2024 and improving in IIQ2024 and IIIQ2024 with milder improvement in IVQ2024. There is contraction in IQ2025 and improvement in IIQ2025 and IIIQ2025.

Chart I-2, US, Real GDP, Quarterly, 1947-2025

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 1983-1998.  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 $10,090.6 billion of chained 2017 dollars in IIIQ1990 to the trough of $9951.9 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

Chart I-3, Real GDP Percentage Change on Quarter a Year Earlier 1983-1998

Source: US Bureau of Economic Analysis

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

Percentage change on a quarter from a quarter a year earlier 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 at 1.4 percent and contraction of 7.4 percent in IIQ2020. GDP contracted 1.4 percent in IIIQ2020 and contracted 0.9 percent in IVQ2020. GDP expanded at 1.8 percent in IQ2021. GDP grew 12.4 percent in IIQ2021. GDP grew 5.2 percent in IIIQ2021.  GDP grew 5.8 percent in IVQ2021. GDP grew 4.0 percent in IQ2022. GDP grew 2.5 percent in IIQ2022. GDP grew 2.3 percent in IIIQ2022. GDP grew 1.3 in IVQ2022. GDP grew 2.3 percent in IQ2023. GDP grew 2.8 percent in IIQ2023. GDP grew at 3.2 percent in IIIQ2023. GDP grew 3.4 percent in IVQ2023. GDP grew 2.9 percent in IQ2024. GDP grew 3.1 percent in IIQ2024. GDP grew 2.4 percent in IIIQ2024. GDP grew 2.4 percent in IVQ2024. GDP grew 2.0 percent in IQ2025. GDP grew 2.1 percent in IIQ2025. GDP grew 2.3 percent in IIIQ2025.

Chart I-4, US, Real GDP Percentage Change on Quarter a Year Earlier 2009-2025

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: https://www.nber.org/research/data/us-business-cycle-expansions-and-contractions  Bureau of Economic Analysis https://apps.bea.gov/iTable/index_nipa.cfm

Chart I-8 shows US real quarterly GDP growth from 1980 to 1998. 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 $10,090.6 billion of chained 2017 dollars in IIIQ1990 to the trough of $9951.9 billion in IQ1991 (https://apps.bea.gov/iTable/index_nipa.cfm).

 

Chart I-8, US, Real GDP, 1980-1998

Source: US Bureau of Economic Analysis

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

Chart I-8 shows US real quarterly GDP growth from 2007 to 2025.

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. US economic growth has been at only 2.4 percent on average in the cyclical expansion in the 65 quarters from IIIQ2009 to IIIQ2025 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 trough 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, 2010  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 first estimate of GDP for IIIQ2025 (https://www.bea.gov/sites/default/files/2025-09/gdp2q25-3rd.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 $16,743.2 billion in IIQ2010 by GDP of $16,269.1 billion in IIQ2009 {[($16,743.2/$16,269.1) -1]100 = 2.9%] or accumulating the quarter-on-quarter growth rates (Section I and earlier https://cmpassocregulationblog.blogspot.com/2025/10/us-gdp-grew-at-38-percent-saar-in.html and earlier https://cmpassocregulationblog.blogspot.com/2025/09/us-gdp-grew-at-33-percent-saar-in.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, 3.7 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, 3.6 percent from IQ1983 to IIQ1995, 3.6 percent from IQ1983 to IIIQ1995, 3.6 percent from IQ1982 to IVQ1995, 3.6 percent from IQ1982 to IQ1996, 3.6 percent from IQ1983 to IIQ1996, 3.6 percent from IQ1983 to IIIQ1996, 3.6 percent from IQ1983 to IVQ1996, 3.6 percent from IQ1983 to IQ1997, 3.7 percent from IQ1983 to IIQ1997, 3.7 percent from IQ1983 to IIIQ1997, 3.7 percent from IQ1983 to IVQ1997, 3.7 percent from IQ1983 to IQ1998, 3.7 percent from IQ1983 to IIQ1998, 3.7 percent from IQ1983 to IIIQ1998, 3.7 percent from IQ1983 to IVQ1998 and at 7.9 percent from IQ1983 to IVQ1983 (Section I and earlier https://cmpassocregulationblog.blogspot.com/2025/10/us-gdp-grew-at-38-percent-saar-in.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 $10,090.6 billion of chained 2017 dollars in IIIQ1990 to the trough of $9951.9 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 IIIQ2025 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021) would have accumulated to 69.0 percent. GDP in IIIQ2025 would be $28,585.0 billion (in constant dollars of 2017) if the US had grown at trend, which is higher by $4560.0 billion than actual $24,025.0 billion. There are more than four trillion dollars of GDP less than at trend, explaining the 24.7 million unemployed or underemployed equivalent to actual unemployment/underemployment of 13.6 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://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). 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://cmpassocregulationblog.blogspot.com/2025/12/ia1-hr5371-continuing-appropriations.html https://cmpassocregulationblog.blogspot.com/2025/11/nonfarm-payroll-jobs-grew-119-thousand.html). US GDP in IIIQ2025 is 19.4 percent lower than at trend. US GDP grew from $16,915.2 billion in IVQ2007 in constant dollars to $24,025.0 billion in IIIQ2025 or 42.0 percent at the average annual equivalent rate of 2.2 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 2.8 percent per year from Nov 1919 to Nov 2025. Growth at 2.8 percent per year would raise the NSA index of manufacturing output (SIC, Standard Industrial Classification) from 108.5636 in Dec 2007 to 178.0579 in Nov 2025. The actual index NSA in Nov 2025 is 96.9756 which is 45.5 percent below trend. The underperformance of manufacturing in Mar-Nov 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021).  Manufacturing output grew at average 1.5 percent between Dec 1999 and Dec 2006. Using trend growth of 1.5 percent per year, the index would increase to 141.7537 in Nov 2025. The output of manufacturing at 96.9756 in Nov 2025 is 31.6 percent below trend under this alternative calculation. Using the NAICS (North American Industry Classification System), manufacturing output fell from the high of 105.8434 in Jun 2007 to the low of 85.6368 in Apr 2009 or 19.1 percent. The NAICS manufacturing index increased from 85.6368 in Apr 2009 to 97.7127 in Nov 2025 or 14.1 percent. The NAICS manufacturing index increased at the annual equivalent rate of 3.4 percent from Dec 1986 to Dec 2006. Growth at 3.4 percent would increase the NAICS manufacturing output index from 106.6125 in Dec 2007 to 194.0744 in Nov 2025. The NAICS index at 97.7127 in Nov 2025 is 49.7 percent 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 105.8434 in Dec 2007 to 144.2034 in Nov 2025. The NAICS index at 97.7127 in Nov 2025 is 32.2 percent below trend under this alternative calculation.

Chart I-9, US, Real GDP, 2007-2025

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 5.2 percent in IQ2020 and 28.0 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 21.62 percentage points in IIQ2020 and subtracted 4.48 percentage points in IQ2020. Gross Domestic Investment (GDI) subtracted 8.92 percentage points in IIQ2020 and 1.80 percentage points in IQ2020. GDP grew at 5.7 percent in IQ2021, at 7.0 percent in IIQ2021, at 3.3 percent in IIIQ2021 and at 7.0 percent in IVQ2021. The highest contributions were 6.05 percentage points by PCE in IQ2021 and 9.42 percentage points in IIQ2021. PCE contributed 2.63 percentage points in IVQ2021, GDI contributed 4.71 percentage points and net trade subtracted 0.29 percentage points. GDP contracted at 1.0 percent in IQ2022. PCE added 0.22 percentage points and GDI added 1.45 percentage points. Trade deducted 2.15 percentage points, government deducted 0.54 percentage points and inventory divestment added 0.30 percentage points. GDP grew at 0.6 percent in IIQ2022. PCE contributed 2.19 percentage points and GDI deducted 2.03 percentage points. Trade contributed 0.38 percentage points, government deducted 0.26 percentage points and inventory divestment deducted 2.03 percentage points. GDP grew at 2.9 percent in IIIQ2022. PCE contributed 1.27 percentage points. GDI deducted 1.26 percentage points and inventory divestment deducted 0.86 percentage points. Trade added 2.63 percentage points and government added 0.28 percentage points. GDP grew at 2.8 percent in IVQ2022. PCE contributed 0.53 percentage points. GDI added 1.43 percentage points and inventory investment added 1.52 percentage points. Trade added 0.14 percentage points and government added 0.69 percentage points. GDP grew at 2.9 percent in IQ2023. PCE contributed 2.99 percentage points. GDI deducted 1.33 percentage points. Trade contributed 0.58 percentage points and government contributed 0.69 percentage points. Inventory divestment deducted 2.18 percentage points. GDP grew at 2.5 percent in IIQ2023. PCE contributed 1.02 percentage points. GDI contributed 1.27 percentage points. Trade deducted 0.36 percentage points and government contributed 0.56 percentage points. Inventory divestment deducted 0.36 percentage points. GDP grew at 4.7 percent in IIIQ2023. PCE contributed 2.08 percentage points. GDI contributed 1.66 percentage points. Trade added 0.09 percentage points and government contributed 0.87 percentage points. Inventory investment contributed 0.97 percentage points. GDP grew at 3.4 percent in IVQ2023. PCE contributed 2.04 percentage points. GDI contributed 0.65 percentage points. Trade deducted 0.06 percentage points and government contributed 079 percentage points. Inventory investment deducted 0.17 percentage points. GDP grew at 0.8 percent in IQ2024. PCE contributed 1.17 percentage points. GDI deducted 0.29 percentage points. Trade deducted 0.42 percentage points and government contributed 0.39 percentage points. Inventory divestment deducted 0.83 percentage points. GDP grew at 3.6 percent in IIQ2024. PCE contributed 2.61 percentage points. GDI contributed 1.44 percentage points. Trade deducted 1.04 percentage points and government contributed 0.57 percentage points. Inventory investment added 1.17 percentage points. GDP grew at 3.3 percent in IIIQ2024. PCE contributed 2.66 percentage points. GDI contributed 0.18 percentage points. Trade deducted 0.41 percentage points and government contributed 0.92 percentage points. Inventory investment deducted 0.11 percentage points. GDP grew at 1.9 percent in IVQ2024. PCE contributed 2.61 percentage points. GDI deducted 1.26 percentage points. Trade deducted 0.06 percentage points and government contributed 0.57 percentage points. Inventory investment deducted 0.91 percentage points. GDP contracted at 0.6 percent in IQ2025. PCE contributed 0.42 percentage points. GDI added 3.79 percentage points. Trade deducted 4.68 percentage points and government deducted 0.17 percentage points. Inventory investment added 2.58 percentage points. GDP grew at 3.8 percent in IIQ2025. PCE contributed 1.68 percentage points. GDI deducted 2.66 percentage points. Trade contributed 4.83 percentage points and government deducted 0.01 percentage points. Inventory investment deducted 3.44 percentage points. GDP grew at 4.3 percent in IIIQ2025. PCE contributed 2.39 percentage points. GDI deducted 0.02 percentage points. Trade contributed 1.59 percentage points and government added 0.39 percentage points. Inventory investment subtracted 0.22 percentage points.

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

 

GDP

PCE

GDI

∆ PI

Trade

GOV

2025

 

 

 

 

 

 

I

-0.6

0.42

3.79

2.58

-4.68

-0.17

II

3.8

1.68

-2.66

-3.44

4.83

-0.01

III

4.3

2.39

-0.02

-0.22

1.59

0.39

2024

 

 

 

 

 

 

I

0.8

1.17

-0.29

-0.83

-0.42

0.39

II

3.6

2.61

1.44

1.17

-1.04

0.57

III

3.3

2.66

0.18

-0.11

-0.41

0.92

IV

1.9

2.61

-1.26

-0.91

-0.06

0.57

2023

 

 

 

 

 

 

I

2.9

2.99

-1.33

-2.18

0.58

0.69

II

2.5

1.02

1.27

-0.36

-0.30

0.56

III

4.7

2.08

1.66

0.97

0.09

0.87

IV

3.4

2.04

0.65

-0.17

-0.06

0.79

2022

 

 

 

 

 

 

I

-1.0

0.22

1.45

0.30

-2.15

-0.54

II

0.6

2.19

-1.69

-2.03

0.38

-0.26

III

2.9

1.27

-1.26

-0.86

2.63

0.28

IV

2.8

0.53

1.43

1.52

0.14

0.69

2021

 

 

 

 

 

 

I

5.7

6.05

-0.40

-1.88

-1.01

1.05

II

7.0

9.42

-0.78

-1.87

-0.81

-0.85

III

3.3

2.24

2.60

2.82

-0.96

-0.54

IV

7.0

2.63

4.71

4.15

-0.29

-0.01

2020

 

 

 

 

 

 

I

-5.2

-4.48

-1.80

-1.28

0.34

0.77

II

-28.0

-21.62

-8.92

-3.69

0.74

1.82

III

34.9

24.95

13.54

8.46

-2.50

-1.14

IV

4.6

3.60

2.46

-0.29

-1.53

0.08

2019

 

 

 

 

 

 

I

2.5

0.42

0.67

0.46

0.49

0.96

II

3.4

2.29

0.70

-0.62

-0.56

0.95

III

4.8

3.06

0.59

-0.18

0.30

0.81

IV

2.8

1.76

-0.97

-0.78

1.40

0.57

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

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. Fixed investment increased at 1.1 percent in IQ2019 and increased at 7.6 percent in IIQ2019. Fixed investment increased at 4.3 percent in IIIQ2019. Fixed investment decreased at 1.1 percent in IVQ2019. Fixed investment decreased at 3.0 percent in IQ2020 and decreased at 27.9 percent in IIQ2020, increasing at 28.7 percent in IIIQ2020 and at 16.5 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 trough in Apr 2020 (https://www.nber.org/news/business-cycle-dating-committee-announcement-july-19-2021). Fixed investment grew at 8.4 percent in IQ2021 and increased at 6.1 percent in IIQ2021. Fixed investment decreased at 1.3 percent in IIIQ2021. Fixed investment increased at 3.1 percent in IVQ2021. Fixed investment increased at 6.7 percent in IQ2022. Fixed investment increased at 1.9 percent in IIQ2022. Fixed investment decreased at 2.2 percent in IIIQ2022. Fixed investment decreased at 0.5 percent in IVQ2022. Fixed investment increased at 4.9 percent in IQ2023. Fixed investment increased at 9.5 percent in IIQ2023. Fixed investment increased at 3.8 percent in IIIQ023. Fixed investment increased at 4.6 percent in IVQ2023. Fixed investment increased at 3.0 percent in IQ2024. Fixed investment increased at 1.4 percent in IIQ2024. Fixed investment increased at 1.5 percent in IIIQ2024. Fixed investment decreased at 1.9 percent in IVQ2024. Fixed investment increased at 7.1 percent in IQ2025. Fixed investment increased at 4.4 percent in IIQ2025. Fixed investment increased at 7.1 percent in IQ2025. Fixed investment increased at 4.4 percent in IIQ2025. Fixed investment increased at 1.0 percent in IIIQ2025. 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

-0.1

II

3.2

-12.0

16.0

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

24.2

7.3

-23.9

2.0

7.9

 

 

 

 

1985

 

 

2011

I

 

 

 

3.7

 

 

-0.6

II

 

 

 

5.2

 

 

9.8

III

 

 

 

-1.6

 

 

18.0

IV

 

 

 

7.8

 

 

10.7

 

 

 

 

1986

 

 

2012

I

 

 

 

1.1

 

 

13.1

II

 

 

 

0.1

 

 

8.4

III

 

 

 

-1.8

 

 

0.6

IV

 

 

 

3.1

 

 

7.4

 

 

 

 

1987

 

 

2013

I

 

 

 

-6.7

 

 

8.0

II

 

 

 

6.3

 

 

4.2

III

 

 

 

7.1

 

 

7.6

IV

 

 

 

-0.2

 

 

6.7

 

 

 

 

1988

 

 

2014 

I

 

 

 

0.2

 

 

 5.0

II

 

 

 

8.1

 

 

 12.3

III

 

 

 

1.9

 

 

 8.4

IV

 

 

 

4.8

 

 

 5.6

 

 

 

 

1989

 

 

2015

IQ

 

 

 

3.6

 

 

1.7

IIQ

 

 

 

0.5

 

 

4.4

IIIQ

 

 

 

7.2

 

 

4.6

IVQ

 

 

 

-5.1

 

 

-0.1

 

 

 

 

1990

 

 

2016

IQ

 

 

 

4.8

 

 

3.0

IIQ

 

 

 

-7.7

 

 

3.0

IIIQ

 

 

 

-3.2

 

 

4.5

IVQ

 

 

 

-9.9

 

 

3.7

 

 

 

 

1991

 

 

2017

I

 

 

 

-10.6

 

 

5.3

II

 

 

 

1.2

 

 

4.0

III

 

 

 

0.5

 

 

3.1

IV

 

 

 

1.7

 

 

9.6

 

 

 

 

1992

 

 

2018

I

 

 

 

4.4

 

 

7.1

II

 

 

 

13.8

 

 

4.2

III

 

 

 

4.7

 

 

1.1

IV

 

 

 

12.2

 

 

1.0

 

 

 

 

1993

 

 

2019

I

 

 

 

3.0

 

 

1.1

II

 

 

 

7.4

 

 

7.6

III

 

 

 

6.4

 

 

4.3

IV

 

 

 

17.0

 

 

-1.1

 

 

 

 

1994

 

 

2020

I

 

 

 

4.8

 

 

-3.0

II

 

 

 

8.3

 

 

-27.9

III

 

 

 

3.4

 

 

28.7

IV

 

 

 

10.0

 

 

16.5

 

 

 

 

1995

 

 

2021

I

 

 

 

8.7

 

 

8.4

II

 

 

 

-0.3

 

 

6.1

III

 

 

 

5.7

 

 

-1.3

IV

 

 

 

8.0

 

 

3.1

 

 

 

 

1996

 

 

2022

I

 

 

 

10.6

 

 

6.7

II

 

 

 

13.0

 

 

1.9

III

 

 

 

9.4

 

 

-2.2

IV

 

 

 

6.5

 

 

-0.5

 

 

 

 

1997

 

 

2023

I

 

 

 

7.7

 

 

4.9

II

 

 

 

7.8

 

 

9.5

III

 

 

 

15.0

 

 

3.8

IV

 

 

 

3.0

 

 

4.6

 

 

 

 

1998

 

 

2024

I

 

 

 

12.3

 

 

3.0

II

 

 

 

14.3

 

 

1.4

III

 

 

 

7.9

 

 

1.5

IV

 

 

 

11.6

 

 

-1.9

 

 

 

 

1999

 

 

2025

I

 

 

 

7.2

 

 

7.1

II

 

 

 

9.9

 

 

4.4

III

 

 

 

9.6

 

 

1.0

IV

 

 

 

2.1

 

 

 

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

Weak behavior of real private fixed investment from 2007 to 2025 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 3.0 percent in IQ2020 and at 27.9 percent in IIQ2020, increasing at 28.7 percent in IIIQ2020 and at 16.5 percent in IVQ2020. Fixed investment grew at 8.4 percent in IQ2021, growing at 6.1 percent in IIQ2021. Fixed investment decreased at 1.3 percent in IIIQ2021. Fixed investment increased at 3.1 percent in IVQ2021. Fixed investment increased at 6.7 percent in IQ2022. Fixed investment increased at 1.9 percent in IIQ2022. Fixed investment decreased at 2.2 percent in IIIQ2022. Fixed investment decreased at 0.5 percent in IVQ2022. Fixed investment increased at 4.9 percent in IQ2023. Fixed investment increased at 9.5 percent in IIQ2023. Fixed investment increased at 3.8 percent in IIIQ2023. Fixed investment increased at 4.6 percent in IVQ2023. Fixed investment increased at 3.0 percent in IQ2024. Fixed investment increased at 1.4 percent in IIQ2024. Fixed investment increased at 1.5 percent in IIIQ2024. Fixed investment decreased at 1.9 percent in IVQ2024. Fixed investment increased at 7.1 percent in IQ2025. Fixed investment increased at 4.4 percent in IIQ2025. Fixed investment increased at 1.0 percent in IIIQ2025. 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 trough 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, 2007-2025

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 IA1-14 from 1979 to 2025. 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 IA1-14, US, Percentage Shares of Net Trade, Exports and Imports in Gross Domestic Product, Quarterly, 1979-2025

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 trough 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 IVQ2021. Recovery interrupted with decrease of GDP in IQ2022 and slowing growth in IIQ2022 and even with growth of 2.9 percent in IIIQ2022 and at 2.8 percent in IVQ2022 and 2.9 percent in IQ2023 and increasing at 2.5 percent in IIQ2023. GDP increased at 4.7 percent in IIIQ2023. GDP increased at 3.4 percent in IVQ2023. GDP increased at 0.8 percent in IQ2024. GDP increased at 3.6 percent in IIQ2024. GDP increased at 3.3 percent in IIIQ2024. GDP increased at 1.9 percent in IVQ2024. GDP contracted at 0.6 percent in IQ2025. GFP grew at 3.8 percent in IIQ2025. GDP grew at 3.8 percent in IIQ2025. GDP grew at 4.3 percent in IIIQ2025. Private fixed investment (PFI) and Equipment (EQP) are weakening in IVQ2022 and 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

2025

 

 

 

 

 

 

 

 

I

-0.6

3.79

1.21

1.24

1.00

0.34

-0.04

2.58

II

3.8

-2.66

0.77

0.98

0.44

0.78

-0.21

-3.44

III

4.3

-0.02

0.19

0.40

0.29

0.30

-0.21

-0.22

2024

 

 

 

 

 

 

 

 

I

0.8

-0.29

0.54

0.22

0.03

0.35

0.32

-0.83

II

3.6

1.44

0.27

0.35

0.44

0.04

-0.08

1.17

III

3.3

0.18

0.28

0.48

0.41

0.14

-0.20

-0.11

IV

1.9

-1.26

-0.34

-0.51

-0.22

-0.03

0.17

-0.91

2023

 

 

 

 

 

 

 

 

I

2.9

-1.33

0.85

1.13

-0.01

0.30

-0.28

-2.18

II

2.5

1.27

1.63

1.47

0.61

0.25

0.16

-0.36

III

4.7

1.66

0.69

0.25

-0.13

0.16

0.44

0.97

IV

3.4

0.65

0.82

0.76

0.17

0.23

0.06

-0.17

2022

 

 

 

 

 

 

 

 

I

-1.0

1.45

1.15

1.49

0.60

0.69

-0.35

0.30

II

0.6

-1.69

0.34

0.91

0.04

0.63

-0.56

-2.03

III

2.9

-1.26

-0.40

0.80

0.14

0.37

-1.20

-0.86

IV

2.8

1.43

-0.09

0.94

0.12

0.49

-1.03

1.52

2021

 

 

 

 

 

 

 

 

I

5.7

-0.40

1.48

1.22

0.32

0.75

0.26

-1.88

II

7.0

-0.78

1.09

1.31

0.63

0.67

-0.21

-1.87

III

3.3

2.60

-0.22

-0.18

-0.59

0.51

-0.04

2.82

IV

7.0

4.71

0.56

0.43

0.00

0.66

0.13

4.15

2020

 

 

 

 

 

 

 

 

I

-5.2

-1.80

-0.52

-0.96

-1.10

0.32

0.44

-1.28

II

-28.0

-8.92

-5.22

-4.15

-2.23

-0.51

-1.07

-3.69

III

34.9

13.54

5.08

2.69

2.42

0.43

2.39

8.46

IV

4.6

2.46

2.75

1.50

0.90

0.53

1.25

-0.29

2019

 

 

 

 

 

 

 

 

I

2.5

0.67

0.20

0.38

0.13

0.20

-0.17

0.46

II

3.4

0.70

1.32

1.06

0.24

0.42

0.26

-0.62

III

4.8

0.59

0.77

0.55

-0.35

0.39

0.22

-0.18

IV

2.8

-0.97

-0.19

-0.24

-0.52

0.49

0.05

-0.78

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

 

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= (∆Pe/∆Pi)∆Q

 

Where ∆Pe 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 new base of 2017 with significant long-term deterioration from 140.193 in IQ1947 to 102.088 in IVQ2020, increasing from 102.055 in IVQ2019 and increasing from 100.236 in IIQ2020 and 101.301 in IIIQ2020. The index increased to 103.990 in IQ2021, increasing to 105.347 in IIQ2021. The index increased to 106.212 in IIIQ2021. The index decreased to 106.208 in IVQ2021. The index increased to 107.266 in IQ2022. The index increased to 109.368 in IIQ2022, decreasing to 108.011 in IIIQ2022 and decreasing to 107.564 in IVQ2022. The index increased to 108.036 in IQ2023, increasing to 108.345 in IIQ2023 and 109.351 in IIIQ2023, decreasing to 108.728 in IVQ2023, decreasing to 108.758 in IQ2024, increasing to 109.033 in IIQ2024 and decreasing to 108.656 in IIIQ2024 and 108.773 in IVQ2024, increasing to 109.765 in IQ2025 and decreasing to 109.741 in IIQ2025. The index increased to 110.395 in IIIQ2025.  A 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 1947-2025

Source: Bureau of Economic Analysis

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

Chart IID-1A provides the annual US terms of trade from 1929 to 2024. The index with new base of 2017 fell from 132.849 in 1929 to 105.459 in 2021, 108.060 in 2022, 108.614 in 2023 and 108.805 in 2024. There is decline from 1971 to a much lower plateau.

Chart IID-1A, United States Terms of Trade Annual Index 1929-2024, Annual

Source: Bureau of Economic Analysis

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

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 with the new base of 2017. 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 2021. There is relative stability in the terms of trade of nonpetroleum goods from 1967 to 2025 but sharp deterioration in the overall index and the index of goods.

 

Chart IID-1B, United States Terms of Trade Indexes 1967-2025, Quarterly

Source: Bureau of Economic Analysis

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

 

© Carlos M. Pelaez, 2009, 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025, 2026.
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