U.S. Gross Domestic Product Hits $200,000 Per Household
“GDP Growth” by Craiyon
In 2023 gross domestic product (GDP) in the U.S. began to exceed $200,000 per household, or about $80,000 per person. GDP is the most common measure of the economic strength—but not social well-being—of a nation. In theory, it also equates to gross domestic income—the gross income earned by workers, business owners, and others who created that product.
By this measure, on a per person basis we’re roughly twice as rich as in 1980, three times richer than in 1960 and four times richer than in 1950.
While there are many ways we can do even better with our money, whether as individuals or through our business, government and charitable institutions, it’s worth pausing at this milestone to consider just how blessed we are. Indeed, there is probably no better word than “blessed” to describe our situation. After all, what is the most important event in each of our lives? Being born—an occurrence over which even the most arrogant of us must admit we had no control. And born into a society with many inheritances, mainly of knowledge and know-how, that have been accrued for us over the centuries by our ancestors.
Why, then, do we have so much trouble celebrating our good fortune these days? Despite many fumbles, our nation remains a beacon of hope for millions. Our initial experiment in self-government led to a world-wide flourishing of democracy. Even dictators like Putin in Russia often try to justify themselves as having won democratic elections. The Pax Americana established at the end of World War II helped lead to an unprecedented decline in world-wide poverty, and, despite many conflicts, more peace than has been known historically. At home, it’s not just incomes that have gone up. Lives have been extended, people retire for more years than has been available to their parents, healthcare is vastly improved, and many forms of air pollution have been abated.
So, then, why do we celebrate so little? Let me put forward three conjectures. First, it’s our natural tendency as humans to focus on fixing new and unsolved problems. Second, most measures of income understate dramatically the resources available to us. Finally, our increasing tribal warfare, stoked by social and other media, makes us more bitter and uncooperative. The first is actually good, the second misleading, and the last simply bad, but in combination they can lead more to envy than celebration.
Because life is always adventuresome, surprising, and fragile, no matter how rich we become, we focus a good deal of our thinking and time to how to live yet better, advance further, and overcome new obstacles. Problem solving is fundamental to the human condition, inherited from our plant and animal forebears seeking their own ways to survive.
That can be exciting but threatening. The exciting side can lead us to discoveries, large and small, to making more contributions in service to others, and to a feeling of accomplishment or joy at learning something new. The threatening side can be a spur to action, but also to despair over what we sometimes can’t solve, including the fact of our own death.
At the same time, our measures of production and income become less meaningful as we become richer. One more movie, dessert, car or house does nothing for survival or the joy of friendship. It certainly provides less well-being than basic food, clothing and shelter.
Meanwhile, the income measures most people see, such as the monthly paycheck or Social Security deposit, hide the value of health benefits they receive from employer of government which, by itself, adds up to an average of more than $25,000 per year per household. Public goods such as streets, air traffic control, police, K-12 education and defense aren’t counted in Census or individual measures of personal income. Tax subsidies generally aren’t included, nor are many types of transfers such as public housing or charitable assistance. All of this leads to an extreme undercounting of our average household income relative to the $200,000 that the national income accountants find.
Ever since notion of continual progress began to take hold in the industrial era, writers have groped with its meaning for not just their time but the future. No longer did people feel badly mainly when their income fell, but now low growth began to be considered a bad thing rather than what it usually is—less of an increase in a good thing.
Now add in the tribal warfare so prevalent in our modern politics. Whether or not it’s worse than what has gone before—for instance, in a Jim Crow society—it makes it much harder to work together not just to solve problems but to move on from past fights. It also tends to treat the rewards of life as zero-sum, where anything someone else has represents something I don’t have. As more time is spent on attacking someone from another party or tribe, or listening to those who do, less time is spent mutually addressing common concerns and interests. It is not just Congressional hearings that often abandon the pursuit of understanding; much of our media replaces the search for truth with a search for tidbits that can make us angry, upset, and self-righteous within our own tribe.
We become especially intolerant of dilemmas. For instance, every budgetary effort to solve a problem presents the dilemma of using resources one way but not another. That’s simply one microcosm of almost all life’s choices, but when taken to a tribal level leads to excessive frustration and efforts to blame others for the very existence of the dilemma. Think of immigration. As long as there’s both a border and people desperate to attain freedom, escape from violence, and a better life for their children, no policy is going to eliminate the dilemma even if government could achieve a better compromise.
Most of my Government We Deserve columns suggest nothing more than that the increased resources of our society, available to individual and government alike, provide us with ways to address better the problems that have become more important, the groups that have been losing out, and the opportunities newly available.
GDP of $200,000 per household simply reminds us of the possibilities right at our feet.
All caveats are reasonable. But what we can do in aggregate is partly measured by what we have in aggregate. This column is simply a teaser to say that we can do a lot, not that what we do is being done well.
On the income story, I will write more in the future. A general conclusion over recent decades is that transfers, largely for retirement and health, have increased the total income of many below median, even while their market income has stagnated. And their percentage increases in total income are still less than for those at the top. .
$200,000 per household is great but how is it distributed? What is life like for those with a median income, which is much lower than the mean let alone the millions who have an income of half the median or less. Then what about the rising costs of housing, medical care, and higher education? I haven't looked at the most recent numbers but there was a long term trend of increasing income shares at the top that does virtually nothing for those at the median or below.