Population Growth and Economic Indicators

Here is a recent chart from Bob Bronson that arrived in an email earlier today. I wanted to reprint it for my readers because of the per capita adjustment technique it employs. Bob’s analysis gives a radically different perspective on the Conference Board’s Coincident Economic Index (CEI) by adjusting for population growth. 

The lesson here is that some data series can be increasingly misleading over longer timeframes if we don’t adjust for changes in population.

For a much simpler example, consider the charts I posted yesterday of Real Disposable Income Per Capita following the latest Personal Income and Outlays report. Here’s a comparison of the same data series without the per capita adjustment.

Obviously the growth of total net disposable income gives a more optimistic view of the overall economy. But the per capita income series probably gives a more accurate view of the economic experience of mainstream U.S. households.

In a more complex and longer timeline, Bob’s data adjustment of the Conference Board’s Coincident Economic Index puts a dramatically different perspective on the strength of the current economic recovery.

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