American Economics Thread

[HighGround]

Sorry, there is no amount of efficiency advantage and gains that can allow the US economy to be bigger than one that uses twice as much electricity or be able to match an economy that is growing usage at 7% every year while the US usage remains flat. You cannot grow an economy without a corresponding growth in the usage of electricity.

United States is a fully developed country that doesn't really have any massive projects going on. China is not.

And that's not an insult, but China has a lot more room to grow. 1.5 Billion people are going to need a lot more electricity and goods than 300 million people, and that's discounting the fact that China is also the world's factory, which again, means more electricity. Just using napkin math, China's electricity demand should be 5 times higher than United States', it's not close to that yet.

Any suggestion otherwise and you're onto magical thinking like a perpetual motion machine -- things just runs forever without adding new energy. Absolutely illiogical.

No, what's happening here is you're trying to use electricity demand as a proxy for GDP or economic growth. That's not what these metrics are, and if you want to engage in self-gratification you don't need proxies. You canssimply look at PPP charts where China is already larger than United States by a significant amount.

PPP is derived using the same numbers that so many people accuse United States of "faking".

 

[gelgoog]

US electric generation isn't growing on par with population growth. Each citizen has in fact less energy than they used to two decades ago.

Chinese per capita electric generation is still like half of that in the US. But it has already surpassed that of Germany.

 

[HighGround]

US electric generation isn't growing on par with population growth. Each citizen has in fact less energy than they used to two decades ago.

Chinese per capita electric generation is still like half of that in the US. But it has already surpassed that of Germany.

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Which makes sense. Efficiency is bringing energy use down. This makes sense, especially since industrial output is not growing, but staying flat.



Which again, makes sense. I don't even remember the last time U.S. has added any serious industrial capacity in the headlines.

What happens when capital investment is still happening but output stays the same? Efficiency improvements. Now people can argue about how this is bad, good, or whatever, but it's not inconsistent with reported economic numbers.

 

[FriedRiceNSpice]

Not sure how my number were off when you're basically corroborating them. I'm surprised my estimate was even that accurate. Layoffs are typically a symptom, not the cause (though a serious enough "symptom" can certainly become a cause of death) and the companies that cut staff did it because they either over-hired or are no longer profitable.

250,000 white collar layoffs over past 2 years != 260,000 tech layoffs in 2023 alone. There was major layoffs in Q4 2022 as well as throughout 2024. There were layoffs in finance (as well other sectors apart from tech and finance) as well.

Overhiring during pandemic may have contributed, but falls far short of explaining the scale of the layoffs. And if companies across the two most important sectors of the economy suddenly became unprofitable, that would be a dire sign indeed.

 

[siegecrossbow]

Do keep in mind that Chinese power generation uses a much larger cut for industrial purposes than civilian use, so that may skew the per capita power a bit.

 

[FairAndUnbiased]

Not sure how my number were off when you're basically corroborating them. I'm surprised my estimate was even that accurate. Layoffs are typically a symptom, not the cause (though a serious enough "symptom" can certainly become a cause of death) and the companies that cut staff did it because they either over-hired or are no longer profitable. A tiny fraction of the workforce being laid off is unlikely to cause some major ill effect down the road, especially since white-collar workers are very likely to find other work.



Electricity consumption is not a proxy for economic growth. Majority of Americans already have a car, a microwave, a fridge, an oven, light, shelter, heating, and air conditioning. Most consumer electronics tend to be efficient. So why would per capita electricity use increase?

It wouldn't. Even existing infrastructure and manufacturing is focused on improvement to energy efficiency rather than adding new capacity. New renewable energy deployments are more about replacing old, dirty capacity like coal. The only real area where electricity demand can grow is with EVs, which is a tiny market in US.

So no, that tweet is dumb.


Most Americans don't want to live in high-density housing in a city. Only a quarter of Americans live in what could be described as an "urban" area. So yes, majority of Americans will not be using public transport and it would be inefficient to build out public transport that way.

I have a thought experiment:

If electricity is decoupled from economic growth because the service economy is real, then the cost of electricity can arbitrarily approach 0 relative to the service economy of finance, software, etc. So at some point, 1 single NFT could have the value of all electricity produced in the US for an extended period of time. That is, after all, the end result of a 'service economy' growing while electricity does not grow.

And suppose someone exercises this and goes through with the purchase of all electricity on the market. Since they cannot take delivery of all the electricity, they can simply pay the equivalent cost and ask the producers to take down generating capacity. Now what? Then the economy collapses.

 

[coolgod]

Electricity consumption is not a proxy for economic growth. Majority of Americans already have a car, a microwave, a fridge, an oven, light, shelter, heating, and air conditioning. Most consumer electronics tend to be efficient. So why would per capita electricity use increase?

It wouldn't. Even existing infrastructure and manufacturing is focused on improvement to energy efficiency rather than adding new capacity. New renewable energy deployments are more about replacing old, dirty capacity like coal. The only real area where electricity demand can grow is with EVs, which is a tiny market in US.

An economist talking about electricity and the economy, that's two things they have no idea about.

"Improvement to energy efficiency", please explain in your own words what this concretely means in terms of electricity usage, and provide numerical examples.

 

[HighGround]

An economist talking about electricity and the economy, that's two things they have no idea about.

"Improvement to energy efficiency", please explain in your own words what this concretely means in terms of electricity usage, and provide numerical examples.

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In

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and

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, the rebound effect (or take-back effect) is the reduction in expected gains from new technologies that increase the efficiency of

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use, because of behavioral or other systemic responses. These responses diminish the beneficial effects of the new technology or other measures taken.

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Or just use common sense. Without an massive increase in industrial output, without a massive migration to EVs, without some source of massive demand for electricity in United States, why would electricity demand rise? You're essentially fighting efficiency gains with population growth.

 

[HighGround]

I have a thought experiment:

If electricity is decoupled from economic growth because the service economy is real, then the cost of electricity can arbitrarily approach 0 relative to the service economy of finance, software, etc. So at some point, 1 single NFT could have the value of all electricity produced in the US for an extended period of time. That is, after all, the end result of a 'service economy' growing while electricity does not grow.

And suppose someone exercises this and goes through with the purchase of all electricity on the market. Since they cannot take delivery of all the electricity, they can simply pay the equivalent cost and ask the producers to take down generating capacity. Now what? Then the economy collapses.

Why would the cost of electricity approach zero? What is the market mechanism that would drive down the price?

250,000 white collar layoffs over past 2 years != 260,000 tech layoffs in 2023 alone. There was major layoffs in Q4 2022 as well as throughout 2024. There were layoffs in finance (as well other sectors apart from tech and finance) as well.

Overhiring during pandemic may have contributed, but falls far short of explaining the scale of the layoffs. And if companies across the two most important sectors of the economy suddenly became unprofitable, that would be a dire sign indeed.

Okay fair enough on the numbers, even though my point was that the number of jobs in tech vs the number of jobs in the economy is not comparable. It doesn't move the needle.

On your second point, why would tech companies be unprofitable after they just laid off workers? Labor is enormously expensive, especially for tech companies who hire in highest CoL areas. Shedding workers is how they maximize profit margin. Facebook by itself had a net income of over 30% or something ridiculous. I mean we don't need to guess whether the tech sector is in danger. Yeah, black swan events can happen and maybe suddenly everything collapses.

But we can observe the health of these companies with a Google search. It's not secret, most of them are public. They're not in any significant danger of collapse. The profit Big 6 generate is eye-watering and ridiculous. Now whether you think that makes logical sense is a different question, but objectively, their balance sheets are very strong.

 

[henrik]

US electric generation isn't growing on par with population growth. Each citizen has in fact less energy than they used to two decades ago.

Chinese per capita electric generation is still like half of that in the US. But it has already surpassed that of Germany.

View attachment 136699

US investments in AI computing should be consuming a lot more electricity. But they are not, so US AI modelling is probably a big scandal.