Gallup Report: No Recovery: An Analysis of Long-Term U.S. Productivity Decline
December 9, 2016
U.S. National Competitiveness Forum, Morning Session — Part 1
James “Jim” Clifton Chair and CEO Gallup
Speech: 29:57 – 53:20
— Please welcome the Chairman and CEO of Gallup, Mr. Jim Clifton.
James Clifton: Deborah, congratulations and thank you for having Gallup be a part of this important 30th anniversary. And congratulations on the great contributions you’ve made not only in business and industry and also to our country.
We were asked to make a report to talk a little about productivity and m more specifically about growth. I don’t want to go through the report because you can read it yourself. We have a slide deck with one slide. I’ve never done a slide presentation before but I have one slide and I do refer to it as my deck.
I want to take a little bit of a different angle on it, a leadership angle on what we’ve done. The guy that founded our company was a guy named Dr. George Gallup. He was more of an academic than an entrepreneur, but he usually makes that real good list, not the Time Magazine list with chefs and that kind of stuff, but the one with George Washington and Franklin and that kind of thing. He loved democracy so much. He said, “If democracy is about the will of the people, somebody should go and find out what that will is.” He would always report that to Washington. He said, “If you are wrong,” that’s what he worried about, “If you’re wrong about the will of the people, when you make policies and you lead, and you ‘re wrong about that premise, the more you lead, the worse you make things.” What a wonderful mission. I was thinking about how that applied to right now and about growth. Because let me just ask you: are we in a recovery? Because it’s a debate. Are we in a recovery?
I don’t think I can say this in front of this group but I didn’t actually know what productivity was. I know what GDP is, and I have some opinions about that. I know that 2.5% is a lot better than where we are now — 1.5% or 1.7%. I know we need 2.5% to break even with the amount of costs we have. And when we are at 1.7%, you are slowly going broke.
I also looked into…If you said, “What’s the right amount of GDP to have?” I don’t think this board will like this, but I don’t know what the right number is. Can you go up to 8? Can you have 9%? What do we need?
The biggest moment in the history of human development of the last few thousand years was between 1850 and 1950, in the United States of America, we overwhelmed the world. Now, we are 25% of all the money. Here‘s a good question. What was GDP during that time series? You know what the answer is? 3.75.
Think about how big those differences are. How do we boom? 3.75 over a time series of 10 years. How do you go broke? You have a time series of we have now, about 1.5 or 1.7. You have to be somewhere above 2.5%. I didn’t know that.
The next thing I learned was that GDP is not the best method. If you take the population of economists – both right leaning, left leaning, moderate, whatever it is — they say the best measure is actually GDP per capita. I didn’t know that. I started thinking maybe it would be GDP per worker would be good. You can’t do that, because sometimes you have fewer people in the workforce if too many drop out, you have it inflate….
You have to do GDP for the whole population. People at home, good for them. They use the economy. too. So do babies. So the best number that you can use. And so that’s the number that Gallup and the council and my team of economists chose to use. We went back 50 years.
We determined that was the single best metric to determine if we are in a recovery.
But now, remember, if we’re in a recovery, I looked the word up. I was on a flight back from Frankfort, Deborah. I was thinking about this. They bring all the newspapers. I had the Financial Times, the Wall Street Journal and the New York Times. i found an article in every single paper on the front page that referred to America’s recovery. That seems like a very important article to me. So, I looked up recovery. It means you have been sick and you are getting better. You’re recovering, so that’s what it means. You wouldn’t think I had to look that up but I did. Going back to Dr. Gallup’s point, if we are in a recovery, that suggests totally different activities than if we are not in a recovery. If we are in a recovery, kind of get your hands off the wheel and tweak it a little bit and keep nudge teeing in the right direction. If we’re in decline, that means that you‘ve got to shake everything up. You need turn-around. That gets back to you better get your premises right. If we are wrong, the more we lead, the more we ruin the country.
So here is my deck, my one slide deck. [Slide is the chart on the report’s front cover] This is 50 years of GDP per capita in the United States. Can you look at that and see a recovery?