Today is the day of principal economic statistics - real GDP estimate for the first quarter of 2024. The mechanical real GDP growth continues in the USA due to population growth as related to the unprecedented immigration by ~2% of population per year. As expected by the WSJ experts, the growth at annual rate (quarterly rate times 4) should be around 2.4% . In my view, the rate will be much higher, at least 3% as the population provides 2% and the intensive growth (as defined by real GDP per capita) can be around 1%, which is little lower than the long-term expectation between 1.5% and 2%. Let's see the result and discuss it later.
The state
of the US economy is controversial from the point of view of the mainstream
economics - fast economic growth and high inflation accompanied by fast labor
force growth. The latter pair is strange for the mainstream approach - the
labor market is not strained but inflation is high. In other words, people are
ready to work for less money and easily enter labor force but prices grow. My
model links the labor force growth with price increase through the density of
income distribution and predicts higher inflation when labor force grows fast
as in the 1970s and 1980s.
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