Confessions of a Two-Handed Economist

President Truman is famous, among other things, for saying he wanted a one-handed economist who would not say “on the one hand this, but on the other hand, that.” In other words, he didn’t always want a complete and balanced analysis – he wanted to know where things were headed. No hemming and hawing!

Truman would have hated me. I love to tell the whole story no matter how much my audience falls asleep.  I am probably a nine-handed economist. So today I am stopping all that. Today, I am one-handed, and today I will tell you what I really think. Today is the day I am part of a panel at Big Arts on Sanibel Island. So I am killing two birds with one stone – writing this blog and using this lunacy as my presentation to the grey-haired audience at Big Arts.

Sanibel Island is an absolutely wonderful place. Thanks to Chuck and Nancy Bonser, who will remain unnamed, we were introduced to this paradise located off the coast of Fort Myers, Florida. We have been going there off and on for the last 30+ years. It not only has wonderful birds to watch, shells to collect, and seafood to eat, Sanibel has a warm and wonderful group of locals who always make us feel incredibly welcome whether we are bellying up to the bar at the “office” (Sanibel Grill) or arguing politics and economics at the Sanibel Café or listening to incredible music at George & Wendy’s Restaurant and the Keylime Bistro.

Thanks to Chuckie B, I have been teaching a course and also participating in panel presentations at a place called Big Arts. I will be teaching again at Big Arts in 2018 but before that class begins, I am part of a panel today! I am supposed to talk about the future of the US economy and think I have 15 minutes to deliver a totally persuasive forecast.

So here goes. My forecast is that the US economy will grow faster in 2018 than it did in 2017. That means a growth rate in the range of 3.5% to 4.5%. All you Never-Trumpers can hang up on me now. You have better things to do than to read or listen to this. I know you were hoping for a feeble growth forecast but I am not a politician, and I am trying to be a one-handed economist today. It’s all about the economy, and as usual, you can take it or leave it.

Below are my bets that underlie this forecast. But first are the risks. Just kidding. I am not going to discuss the risks. I have only one hand today and even though there are trends that argue against me, I am going to ignore them. Take that President Truman!

First is brother Mo. Mo is short for momentum. Most of the time forecasters bet on Mo. It’s like knowing that Uncle Jason always stops at the local grocery store on his way home from work and buys one can of Rainier. He never deviates. But sometimes unexpected factors cause him to alter his pattern. Ashley might want him to stop at the Whole Foods. Whatever. On a given day it makes sense to bet on Jason's Rainier and on the economy pretty much performing like it has for the last few years. Go Mo!

Second is gathering confidence. Each year in which the economy does not fall into a recession and employment rises and inflation seems a little less likely to fall creates a floor of confidence that allows the economy to not only continue growing but to grow even faster. Confident consumers are more willing to buy and firms are more willing to produce.

Third is what is happening in the rest of the world. The US led much of the world out of the last recession and is now ready to step back and let some of the other countries pull the wagon. As many of the hardest hit countries recover and as Europe and Japan strengthen, it creates a global environment of growth to which the US benefits.

Fourth is interest rates. Many people worry that rising interest rates will nip my last three points in the bud. But I doubt that will happen. The interest rates we know and love are not controlled by the Fed. The Fed may plan to raise interest rates but that doesn’t mean that rates will behave. Telling your child that you are going to cut his allowance does not always elicit the desired change in behavior. As in the case of the errant child, interest rates are impacted by many things. While the world is getting stronger, it is still typified by an overcapacity in which supply is greater than demand. Output can expand greatly without the usual cyclical factors that raise prices, price expectations, wages, and interest rates. The data supports this view. Last week I showed a graph that questions if and when a new Fed policy to raise interests will actually lead to that result. It's definitely not a slam dunk.

Fifth is geopolitical. My observation as a kid was that bullies loved to harass kids who would not fight back. Bullies often stay away from kids who will dish out at least a little punishment. The US is saying some tough things to the world’s bullies – I don’t need to name them since it is pretty obvious who these bullies are. Some of you worry that this will lead to war and some really horrible consequences. I don’t. I don’t think our government wants war any more than previous governments did. But our government is doing some things that make us less easy to bully. So I am betting that there will be a lot of noise about US defense and security and very little negative reaction that might put my growth forecast in jeopardy.

Sixth is "da Market". The past changes in stock market indexes cannot be ignored. A lot of wealth has been created. While uncertainty about the future means we won't go on a spending spree, it is hard to ignore those trillions of dollars accumulating in our financial statements. Spending some of those wealth increases will add to the party. Another aspect of rising stock prices is the falling cost of capital. The higher are stock prices the lower is the cost of raising a given amount of capital. With interest rates stalling and stock prices rising, it will be a great time to buy plant and equipment. 

Finally, I like that the pendulum is swinging. Government financial regulation, climate change policy, other EPA rules, and other government regulations on business can move a wee bit away from where they were heading in the past eight years without causing the world to explode. I know some of you want ever more progress on various social policies and government regulation. You have good hearts and smart minds. But I don’t think you know enough about the effects of economic growth on all the things you cherish. I am, therefore, happy to see the pendulum swing back a bit with the hope it will generate growth without harming the future of the US and the planet.

Notice I didn’t say much about tax reform. In my humble opinion it might be eighth in the list of seven I just discussed. It should help economic growth but it is such a hodgepodge of good things and gimmicks, I am not ready to pronounce the tax reform as the greatest thing since sliced bread. No, I am not crazy about its implications for the national debt. 

I stuck my neck out. You are invited to chop away. Hope you have a wonderful 2018!

Fed Policy and the Market

As the (red line in the) below chart shows, the US Federal Reserve is embarking on a new policy to lift interest rates gradually back to normal levels. Today's post suggests that even if the Fed keeps to its goal of raising the Federal Funds rate gradually in the coming year, the Fed might not get what it is hoping for.

To convince you that this is no slam dunk (to raise market interest rates), it takes a little excursion into interest rates and then a closer look at the below graph.

Let's start with interest rates. There are many interest rates out there, and the Fed has no direct control over them. You can think about an interest rate in two ways -- as a saver or as a borrower. When you put your life savings into your money market account, you soon learn that with today's low interest rates you get enough return to buy yourself maybe 15 minutes on a Bloomington parking meter. If you instead lend the money to the government by buying a long-term government bond, you might get an interest rate of about 2.8%. That means if you buy a bond for $100, you will get back the sum of $2.80 each year you own the bond. That return amounts to a coffee of the day at Peet's. No refills.

You might instead want to borrow money. Most of us borrow for a car or a home or a month's supply of JD. In that case, you would pay the interest rate on a car loan or mortgage rate or whatever rate your friendly credit company charges.

Whether a saver or a borrower, you experience interest rates, and the fact is that interest rates are not set by the Fed or the government or even Santa. Interest rates, prices of stocks and peanuts, respond to market forces. If in today's market everyone wants to borrow and no one wants to lend, this tends to raise interest rates. If tomorrow most people are interested in lending and there are few borrowers around, then interest rates fall. We say interest rates are mostly market driven.

A quick look at the blue line (interest rate on a government bond with a 10 year maturity) in the graph below shows you that interest rates have a pretty exciting life. And this graph only shows you 1999 to present. A graph going back to the 1960s would make your head swim. Remember those 20% interest rates in the 1970s?

Okay, so rates are determined by market forces. Where does the Fed come in? Like most government entities, the Fed likes to try to make the world better. The way the Fed does this is to try to raise interest rates when the economy is acting like a runaway train car. Or when the economy gets slow and creepy, the Fed tries to stoke it with lower interest rates.

I keep saying "tries" because the Fed does not tell banks and other financial institutions how much to charge on auto loans or mortgages. But the Fed can try to influence these rates through its control over something called the Federal Funds Rate (FFR). The Fed sets goals for the FFR and can reach those goals by intervening in something called the FF market where bankers loan each other money on a  daily basis. It's too long a story for the blog today but just take it for granted that the Fed can take actions which either decrease or increase the FFR.

The FFR is the red line below. A quick review: the Fed altered policy several times since 1999, first raising the FFR, then reducing it only to raise it again. It bottomed out at the end of 2008 and was kept near zero until recently. November 2015 marks a turning point in which the Fed started raising the FFR. We are told that since the economy is now humming along at about 70 miles per hour, they need to raise rates to cool things off a bit. Plans are to increase the FFR several times into 2018.

Why raise rates? Presumably because a near-zero percent interest is not normal and it tends to penalize savers. Some think it might make savers want to take on too much risk by buying bitcoins or 8-track players. Whatever the reason, the goal today is to raise the FFR. The goal is to have the rise in the FFR spillover and influence all those other market rates. The chart below is instructive in that regard. We can look at the relationship between the FFR and the interest rate on government bonds with a 10-year maturity (I chose this one market rate because there are just too many too choose from and this one has the reputation of being a good indicator of what is happening to most rates.)

Notice in the chart that increases in the FFR do not always result in higher interest rates.

• After 1999, the FFR increased to almost 7% while the 10-year rate started to rise but then fell.
• After 2004, the FFR went from 1% to over 5% yet the 10-year rate bobbed up and down like a tuna in a shark tank and ended up only a smidge higher than it has been in the recent past.
• After 2016, the FFR gently increased while the 10-year rate's downward trend was only interrupted in 2017. But notice that the 10-year rate today remains below its peak value in 2014 and is well below other previous peaks.

Since you are still a bit slow from your New Years' partying, I will refrain from taking this much further. But the obvious question to ask at this point is why the 10 year rate has been so fickle. It is supposed to do what the FFR tells it to do. The bottom line is that market rates are impacted by many things -- psychological and other -- and only one of those many things is the level of the FFR. The chart shows how important markets are to interest rates and why it is possible that Fed policy may not succeed in its goal to protect the US economy from immodest growth. Worth speculating about at George and Wendy's is the long-term downward trend observed in the graph. The 10-year rate has been on a downward slope for about 17 years. I wonder what it will take in the way of Fed policy to reverse that.

Christmas 2017

I thought I might give us all a break this week. No macro today! 

Mostly, I want to say thank you for tolerating me for another year. I started this blog in 2010 right after I retired from Indiana University. I think I have now posted 441 times. What fun!

I started this blog for two reasons. First, I wanted to keep up with what was going on with global macro. Second, I wanted a way to keep up with friends. It worked. I think about macro a lot and the issues show no signs of easing. And it turns out that since I see some of you in the flesh now and then, I often get the chance to talk shop with you at parties and other venues.  

But even better than all that is that I continue to hear from so many of you. The blog distribution list started very small and was built one person at a time over these years. Some of you are friends from long ago in public school in Miami. Others went to Georgia Tech, Arizona, or UNC with me. The remainder includes family, friends, and neighbors. And I love that I continue to harass my former colleagues and students from Foster, Kelley, SKKU, and those I had the pleasure of teaching in places such as Helsinki, Hanover, Budapest, Hanoi, Budapest, Big Arts, and more.

You cannot imagine how much pleasure I get when I hear from you. Some of you post a comment on the blog site but most of you send me emails. Sometimes you like a post. Sometimes you don’t. Sometimes you don’t even read the post but you reply just to say hello or to tell me how you are doing. What an incredible blessing!

Finally, let me say that while I love the macro and the chance to write and argue about contemporaneous issues, I personally find too much angst among my friends. I see people who are very bothered if not highly stressed about the future of our country and the world. All I can say is that now is not the first time nor will it be the last time we think the world is going to Hell. I remember all too well walking around Miami in the early 1960s wondering when the missiles from Cuba were going to rain on me and my friends and family. You should have seen all the people trying to build nuclear bomb shelters in the coral rock of Miami!

I say this because too much worry diverts us from the truly important and possible things we can do with our lives. Having a political opinion is fine and important. But taking care of our loved ones and helping our friends and neighbors navigate life hold more chances for personal growth and true satisfaction.  

I hope you have a wonderful Christmas and New Year and that we find productive and fun ways to work together and muddle through the best we can. Stay in touch!

Hyperinflation in Higher Education

This week I decided to follow up on a graph I saw in the Wall Street Journal that compared college tuition and out-of-pocket costs to the costs of medical care and overall living costs. See the graph at the bottom. All I can say is, Wow. The red line in the chart goes from the year 2000 to 2016. It shows that costs of higher education increased by just short of 150%. Imagine if your waistline increased by 150%. 

We all complain about the rising costs of medical care. It is the yellow line in the chart, and it rose by about 75% over those same years. Apparently a nice course in the liberal arts is worth a lot more than a course in biology. Okay that's a distortion, but what the graph says is that the costs of college education went up twice as fast as medical care costs from 2000 to 2016. And then there is all that other stuff you buy -- all those silly aged steaks, lovely cars, and ovens. The overall Consumer Price Index increased by under 50%. 

It is pretty clear from the pretty graph that higher ed spending is the winner. As a former professor, I resent that. Where was all that money when I was sweating it out in my office without electricity and running water? 

Mean conservatives have looked at all this and have come to some conclusions. They see a connection between the ease of getting loans for college, tax benefits, and the expansion of grants and scholarships. Some of these big meanies are proposing a crazy thing. Maybe if the government quit favoring higher ed so much, the price might not go up another 150% in the next years. Crazy idea, eh?

But Junior has to go to school, right? School? Are you kidding? Don't scream at me but I remember what it was like to go to school. Jim and I roomed together for three years in what might now be considered a Georgia prison. Back in those olden days there was no student union, there was not even an espresso maker or a StairMaster in our dorm's break room. Basically there was nothing in the break room except for a couch. No TV. No beer. No JD. No computer games. The entire floor of our dorm shared one pay telephone and one bathroom. We had to pass 18 hours per quarter to graduate in four years and therefore the lack of almost all amenities was necessary since we actually had to study. Study, really?

Today, universities are not spending the money on the faculty -- or at least not on most of them. In fact, the new wave in higher ed is to minimize the use of regular tenure-track faculty. But they do seem to have plenty of money for planting and replanting all the flower beds each season and for building walls, monuments, and other things of architectural beauty. We have more trees on the IU campus than Redwood Park. We build new academic and other campus buildings faster than the NFL can build domed stadiums. Clearly we want the alumni to be comfy when they go to sporting events and we want helicopter parents to enjoy their spring strolls around campus when they come to harass their lovely children's professors. We build luxurious dorms faster than Starbuck's builds coffee shops. Why would a student want to graduate if she could stay in these palaces located within meters of favorite student watering holes?

The kids do not get jobs and the ones who run out of courses to take leave campus and move in with their parents. Meanwhile, the nation has a shortage of plumbers and programmers. Luckily many of these unemployed students are excellent at creativity activities and learning how to discover themselves as they go on their graduation trips to Luxembourg. 

Sorry folks, but this old codger does not like this brand of change. I'd rather see our country surging ahead as a model of innovation and technological progress. I'd like to see adults worrying less about the creature comforts of their kids and helping them better understand the values of things like history, economics, accounting, hard work, patience, and so on. Removing some of the government support might lead to more demanding consumers who require that universities get back to doing what they should be doing. In the meantime, if college is too expensive, young people might try going to a local community college where they might learn something and also gain a marketable skill. They can go to Luxembourg later on their own own dimes. 

US Deficits in Goods Trade

Trade and protectionism are hot topics. At the root of the discussion is what has happened to the US as a trading partner. There is much to this debate and I won’t handle it all here today. Instead I focus on something that I think is central to the issue – the performance of US trade in goods.

International trade goes well beyond trade in goods. But as it turns out, a key part of what we consider to be problematic for the US is trade in goods. We trade services (like entertainment, transportation, shipping, and tourism) and we engage in a lot of international exchange with respect to financial and real assets (bonds, stocks, bank accounts) but we generally run surpluses in those trades. If we have a large and persistent trade deficit, it is mainly with respect to goods.

So I am back to playing with the data again this week. With trade figures there are choices to make. Much of what we refer to as trade is measured and captured in our balance of payments (BOP) account. There we find the Current Account and the Financial & Capital Accounts that contain information about exports, imports, and so on. These figures are always presented in nominal terms and thus measure changes in both quantity and price. Export and imports of goods and services are also published in our National Income Accounts (NIA) and those measures of trade are very compatible with the way Gross Domestic Product (GDP) is measured. The NIA accounts are presented in both real and nominal terms.

Yikes – too much information. Anyway, I decided to use the NIA measures since they are compatible with the way GDP is measured. I am using the nominal versions because they are somewhat more compatible with the BOP figures. I did a quick comparison of the real and nominal NIA measures and it didn’t change my overall conclusions. Whew. Where’s that JD?

The table at the bottom shows nominal NIA measures of US exports and imports of goods starting in 1964, the year I began studying Industrial Management at Georgia Tech and was introduced to chili dogs at the V in Atlanta. I present data for five years that are separated by 13 year-intervals because 13 is my favorite number (1964, 1977, 1990, 2003, and 2016). These 5 years bracket 1990 which is a demarcation point for the rise of globalization. This allows me to compare 26 pre-globalization years to 26 post-globalization years. Is this fun or what?

The top of the table presents US imports and exports in billions of dollars. Nominal GDP, also in the table, went from about $6 trillion in 1990 to almost $19 trillion in 2016. Some of that increase is because of price increases – with the rest from quantities. But GDP is not the point today – though it gives you a benchmark as to how much the size of the overall economy changed over those 52 years. Goods exports went from $403 billion in 1990 to almost $1.5 trillion in 2016. Imports increased too – from $508 billion to about $2.2 trillion. The net imports (imports minus exports) was $105 billion in 1990 and increased to $778 billion in 2016.

If I stopped right now many of you would have an aha moment. What you would see is the following post-globalization experience: US imports of goods outran our exports of goods and the trade deficit in goods increased dramatically. There are no smoke or mirrors here. This is the kind of information that supports the popular idea that globalization has not been good for the US and that there might be unfairness working against us – be it so-called free trade agreements or cheating or whatever.

But let’s not stop there. In the second part of the chart we display trade in goods as a percent of GDP. In 1964 goods exports were 3.9% of GDP. By 2016 goods exports accounted for twice the share of the economy at 7.8%. But notice that the pre-globalization gain of 2.8 percentage points (from 3.9% to 6.7% of GDP) compared to the 1.1 percentage point gain in the post-globalization years. That is, exports gained as a share of the economy much more before- compared to after-globalization. What about imports? Imports of goods increased 2.7 points before globalization and then 3.4 points post-globalization.

It is true that imports of goods picked up its pace after globalization while exports did the opposite. But notice also that much of those changes came in the 13 years after 1990. During the time from 1990 to 2003, exports fell as a share of GDP while imports rose dramatically. But then in the most recent 13 years we see that reversing as the share of exports increased at more that twice the pace of goods imports.

What can we say?

First, goods trade – both exports and imports were rising as a share of the economy for 52 years – both before and after globalization began accelerating in 1990.

Second, when we compare the data before 1990 with what happened afterward you can see much bigger increases in imports of goods relative to exports.

Third, if we look closer at the data since 1990 we see that most of the advantage of imported goods peaked by 2003 and has reversed since.

What does all this mean? For one thing it means that this is a pretty rich stew with a lot of vegetables. If we combine these numbers with the numbers from last week’s blog post we wonder if some of these trade results have something to do with the fact that so many countries have been narrowing the economic gaps between them and the US.

The 1990s were a time when many countries decided to open-up and use trade as a development tool. These countries wanted to rebuild and become more competitive and many were very successful as we saw in this blog last week. As incomes across the world grew, so did their appetites for goods and the growth of US exports of goods verifies this. But as their incomes grew they also became stronger competitors to the US and our goods imports rose as well.

Since so many countries were starting from very low incomes and poor productivity it made sense for the US to make special compensations or to ignore remaining protections in these countries. US citizens gained many of the benefits as more goods were available to them at lower prices. Lower prices gave US residents more dollars to spend and these people redirected some of these surpluses to US companies and created millions of jobs. The GDP data below show remarkable growth in our economy as some jobs declined while other expanded. 

There are some who think that the US can use its own arsenal of protectionist policies to preserve and restore jobs in the US. But that thinking is short-sighted. Despite catching up many countries still retain much lower incomes and a distinct price advantage that goes with it. Protecting US citizens from low prices on low-skilled goods makes no sense. It’s like sticking a finger in the dyke. What makes more sense is to recognize that the world has changed and that developing countries need to protect their own industries and workers less. Let’s not raise the worldwide level of protection – let’s lower it. 

But what about all those US workers in firms and industries that cannot compete? The answer is pretty simple in principle. Protecting these workers is only a temporary measure so long as the American worker makes $50k per year and foreign competitors make half or less. What makes sense is to encourage other countries to keep catching up with our incomes – and to find ways to better train and retrain our workers to fit better into US advantages in education, science, technology, entertainment, communications, and so on. The data below suggest that the export/import issue started turning in 2003. Perhaps we can keep that alive in the next 13 years following 2016.

Billions of Dollars	1964		1977	1990	2003	2016
Nominal GDP		686	2,086	5,980	11,511	18,625
Exports of Goods		27	128	403	741	1,446
Imports of Goods		40	153	508	1,296	2,224
Net Imports		13	24	105	555	778
As  Percent of GDP		1964	1977	1990	2003	2016
Exports of Goods		3.9	6.2	6.7	6.4	7.8
Imports of  Goods		5.8	7.3	8.5	11.3	11.9
Net Imports		1.9	1.2	1.8	4.8	4.2
Source BEA.gov

Catching Up to the USA 1990 to 2017

Happy December!

I had so much fun last week with data I decided to do even more this week. This time I have some tables to discuss and they need a little explaining. But first, a little background. The idea today is to shed some light on how much the world has changed in the last 28 years. My data starts in 1990 and looks at changes through 2017. The data come from the International Monetary Fund; it's their measure of real GDP per capita. RGDP per capita is one way to measure changes in the economic welfare of the average person.

This sort of cross-country comparison is not easy. I chose per capita real GDP because it seems closest to the buying power of people in these countries. Country comparisons usually require conversions of non-US currencies to the dollar so all the GDP figures below have been translated to dollars. It is traditional for longer-run comparisons to use an exchange rate called the purchasing power parity value of the exchange rate to the dollar. The IMF used the 2011 PPP value of the dollar for these comparisons. Yes, using PPP is highly debatable but I am sticking with it!

Much has happened in the world since 1990. The Soviet Union imploded, and the Berlin Wall came down. Globalization re-started. Many free trade agreements were consummated. The year 1990 was a time when the USA had a considerable lead on most countries in terms of economic size and competitiveness. Home Alone was the most popular film in 1990, and Windows 3 was released by Microsoft.

Table 1 lists 36 countries I selected to compare with the US. In 1990, real GDP per capita in the USA was nearly $37k. Right behind the USA in 1990 were Germany, Italy, Canada, France, and Japan. Saudi Arabia was ahead of all these countries with a value of $46k. Among those at the bottom in 1990 were two countries freed from the Soviet Union (Lithuania and Latvia) and three Asian countries (China, India, and Vietnam).

Table 2 measures the growth of real GDP per capita of these same countries between 1990 and 2017.  During that time period US per capital GDP increased to almost $54k and grew about 2.5 times. Twenty-two of these countries grew faster than the USA. But three stick out in the list for growing more than the rest, with China growing 10 times between 1990 and 2017. You might say that since the per capita real GDPs of those countries were small in 1990, they had the chance to grow faster and that would be true. But notice that not all of those countries with lower incomes in 1990 grew so fast. Obviously the speed demons had something special going on that helped assist the growth. Latvia and Estonia took advantage of the dissolution of the Soviet Union. Several Asian countries -- especially China, Vietnam, and India -- showed remarkable ability to change and grow.

Table 3 focuses on how fast this group of 24 is closing in on the per capita RGDP of the US. I did a double-take and then some research just to check the top line of Table 3 that shows Ireland's per capita real GDP was $66K in 2017. Ireland's value went from 60% of the US in 1990 to 120% in 2017. Now that is catching up! Where's the Irish whiskey? I am ready to drink to that. No offense intended to JD.

The order of countries in Table 3 is in terms of how much each country caught up to the US. Taiwan is second in the table because it went from 40% to 80% of US per capita RGDP. Countries that closed the gap on the US the most were Ireland, Taiwan, S. Korea, Lithuania, China, Latvia, Poland, Turkey, Vietnam, India and Israel.

Mexico is one of the countries that did not close the gap with the US. Mexico's per capita RGDP was about 30% of the US in 1990 and it remained at 30% in 2017. Canada's values were larger than Mexico's but Canada did not gain on the US either, remaining at about 80% of the US in 2017.

Some countries slid downward. For example, the bottom of the chart is taken by Saudi Arabia whose per capita RGDP was 120% of US in 1990 and fell to 90% in 2017. Other sliders were Italy, Venezuela, Greece, Japan Russia, France, S Africa, Brazil, Haiti, and Germany. Recall, the US grew by 2.5 times in those 28 years. These last countries grew slower than that.

There are many factors that contribute to a country's growth in real purchasing power. Today's blog post does not explain why some countries grew faster than others. But it does show quite a disparity in performance over a 28-year time period. We are not all the same in relative terms as we were when we watched Home Alone in 1990. These differences will reflect the bargaining positions and powers as trade and other relationships are fashioned in the years ahead. Understanding changes in economic power might be useful as we negotiate in the future.

Real GDP Per Capita (Purchasing Power Parity)

Source: IMF: World Economic Outlook Database October 2017

Table 1

Country	1990	2017
Argentina	11,225	18,844
Brazil	10,562	14,127
Canada	31,411	43,875
China	1,515	15,151
Colombia	7,523	13,174
Egypt	6,848	11,842
Estonia (1995)	11,003	28,684
Ethiopia	644	1,926
France	30,421	39,691
Germany	32,067	45,757
Greece	21,442	25,314
Grenada	7,210	13,470
Haiti	2,027	1,650
Hungary	17,015	26,348
India	1,802	6,538
Iran	11,571	18,255
Ireland	21,208	66,196
Israel	20,065	33,037
Italy	30,969	34,606
Japan	30,362	38,878
Korea	11,633	35,897
Latvia (1995)	8,298	24,873
Lithuania (1995)	9,307	29,105
Mexico	12,411	17,753
Poland	10,163	26,658
Puerto Rico	22,286	34,537
Russia	20,801	25,427
Saudi Arabia	45,643	50,365
South Africa	9,899	12,215
Spain	23,662	34,788
Taiwan	15,546	45,412
Turkey	10,834	24,109
UK	27,077	39,755
US	36,999	54,223
Venezuela	14,786	11,290
Vietnam	1,473	6,267
Table 2
Country	1990	2017	Change
China	1,515	15,151	10.0
Vietnam	1,473	6,267	4.3
India	1,802	6,538	3.6
Lithuania (1995)	9,307	29,105	3.1
Ireland	21,208	66,196	3.1
Korea	11,633	35,897	3.1
Latvia (1995)	8,298	24,873	3.0
Ethiopia	644	1,926	3.0
Taiwan	15,546	45,412	2.9
Poland	10,163	26,658	2.6
Estonia (1995)	11,003	28,684	2.6
Turkey	10,834	24,109	2.2
Grenada	7,210	13,470	1.9
Colombia	7,523	13,174	1.8
Egypt	6,848	11,842	1.7
Argentina	11,225	18,844	1.7
Israel	20,065	33,037	1.6
Iran	11,571	18,255	1.6
Puerto Rico	22,286	34,537	1.5
Hungary	17,015	26,348	1.5
Spain	23,662	34,788	1.5
UK	27,077	39,755	1.5
US	36,999	54,223	1.5
Mexico	12,411	17,753	1.4
Germany	32,067	45,757	1.4
Canada	31,411	43,875	1.4
Brazil	10,562	14,127	1.3
France	30,421	39,691	1.3
Japan	30,362	38,878	1.3
South Africa	9,899	12,215	1.2
Russia	20,801	25,427	1.2
Greece	21,442	25,314	1.2
Italy	30,969	34,606	1.1
Saudi Arabia	45,643	50,365	1.1
Haiti	2,027	1,650	0.8
Venezuela	14,786	11,290	0.8
Table 3
Country	1990	2017	Rel to US	Rel to US	Chg Rel
Ireland	21,208	66,196	0.6	1.2	0.65
Taiwan	15,546	45,412	0.4	0.8	0.42
Korea	11,633	35,897	0.3	0.7	0.35
Lithuania (1995)	9,307	29,105	0.3	0.5	0.29
China	1,515	15,151	0.0	0.3	0.24
Latvia (1995)	8,298	24,873	0.2	0.5	0.23
Estonia (1995)	11,003	28,684	0.3	0.5	0.23
Poland	10,163	26,658	0.3	0.5	0.22
Turkey	10,834	24,109	0.3	0.4	0.15
Vietnam	1,473	6,267	0.0	0.1	0.08
India	1,802	6,538	0.0	0.1	0.07
Israel	20,065	33,037	0.5	0.6	0.07
Grenada	7,210	13,470	0.2	0.2	0.05
Argentina	11,225	18,844	0.3	0.3	0.04
Colombia	7,523	13,174	0.2	0.2	0.04
Puerto Rico	22,286	34,537	0.6	0.6	0.03
Egypt	6,848	11,842	0.2	0.2	0.03
Hungary	17,015	26,348	0.5	0.5	0.03
Iran	11,571	18,255	0.3	0.3	0.02
Ethiopia	644	1,926	0.0	0.0	0.02
Spain	23,662	34,788	0.6	0.6	0.00
UK	27,077	39,755	0.7	0.7	0.00
US	36,999	54,223	1.0	1.0	0.00
Mexico	12,411	17,753	0.3	0.3	-0.01
Germany	32,067	45,757	0.9	0.8	-0.02
Haiti	2,027	1,650	0.1	0.0	-0.02
Brazil	10,562	14,127	0.3	0.3	-0.02
Canada	31,411	43,875	0.8	0.8	-0.04
South Africa	9,899	12,215	0.3	0.2	-0.04
France	30,421	39,691	0.8	0.7	-0.09
Russia	20,801	25,427	0.6	0.5	-0.09
Japan	30,362	38,878	0.8	0.7	-0.10
Greece	21,442	25,314	0.6	0.5	-0.11
Venezuela	14,786	11,290	0.4	0.2	-0.19
Italy	30,969	34,606	0.8	0.6	-0.20
Saudi Arabia	45,643	50,365	1.2	0.9	-0.30