JCL Blog

Growing or Shrinking

I think it is a miracle that our economy grows at all.  I can't say that I have an intricate understanding of the way we calculate GDP or inflation.  But here are the things from my life that are pulling the deflationary lever: 

Computers:  In 1988 I bought at 286 machine for $5,000 -- now I buy computers for less than $1,000.

Cell Phones:  In 1990 my cell phone bill was $600 per month.  It is still $600 per month but I have 11 phones and a handful of data devices on it.

Housing:  I do pay more for housing because my family is bigger and we have upgraded our house.  But I don't see any reason to expand any further and at 30 years old, my house is a long way from wearing out.  On a larger scale, we have about 15% vacancy in housing units (empty houses, rental units, and other unoccupied inventory) I would say it will be a while before we need more housing as a nation.

Cars:  We just bought a car for about the same price as the last new car I bought in 2002.  And this one is nicer.

Media:  I pay less for my phone, internet, cable TV, music, and movies than in the recent past.

Travel:  We seem to get great deals on airfare and hotels whenever we decide to travel.  We may be traveling more that we used too -- so this could be a net increase.

Healthcare:  Our family spending on healthcare -- even with insurance -- goes up significantly every year.

Education:  My kids are now in private school because I could not risk a public education.  Up a bunch here too.

In the end, more items are going down or staying flat than items going up.  The ones going up, healthcare and education, are going up a lot.  So my personal net GDP change is up.  This "growth" is pretty much a demographic thing -- my kids are growing up and requiring more medical attention and more education spending.  Without those two things, my individual GDP change would be down.