August 23, 2003

Fading away

The Economist -- Half a billion Americans?

"But assume, for a minute, that Americans remain, as they are now, about one-third richer per head than Europeans. The high-series projection implies that America's economy in 2050 would still be more than twice the size of Europe's—and something like that preponderance would still be there even if you assume that by then much of Central and Eastern Europe will have joined the EU."

Stratfor -- U.S. Dollar Steams Ahead, but No Euro Crash Pending Aug 22, 2003 [subscription only so no link]

"On the economic front, the U.S. economy has outgrown the European economy for seven consecutive quarters, and by any measure -- productivity, unemployment, business investment, currency flows, stock markets, etc. -- the United States clearly is leaving Europe behind. This is not particularly new. In fact, with the exception of three quarters during the 2001 recession, this has been the state of affairs since the end of the Cold War."

Let's assume that the time period is 1990 q1 - 2003 q2 so we have a period of 54 quarters. For 51 of the 54 quarters the US grew faster. Is it reasonable that the Economist's assumption will hold true that the US will only be 1/3 richer than the EU in 2050? Read the article and you will find a tale of woe about the EU falling behind in population with rising costs as far as the eye can see while US dependency costs stabilize with a new boom of US children coming online into the working world about 2030. If Stratfor's correct though, the Economist might actually have been optimistic about Europe's comparative future.

Posted by TMLutas at August 23, 2003 04:08 AM