In 1981 the CIA published a report of its assessment of the Russian economy, concluding that in the USSR economic prospects were “gloomier and policy choices more difficult than at any time since Stalin’s death.”
“During the past few years, the USSR has experienced: A major slowdown in oil production growth and a decline in coal production. A major rise in energy costs. A fall-off in investment and labor-force growth. Their problem is that annual increments to national output. . .will be too small to to permit: The increases in investment in industry, agriculture, and transportation needed to revive the economy in the latter part of the decade. Continued growth in defense spending at the rates of the past (4 to 5 percent per year on average). Greater support to Eastern Europe. Any substantial increase in consumer welfare. Simply stated, something will have to give.”
Before the decade ended, the Soviet Union collapsed.
On the home front: How does the U.S. Compare?
According to the U.S. Energy Information Agency domestic crude oil production averaged 7.355 million barrels per month in 1990 – by 2011 that had dropped to an average of 5.658 million barrels per month.
In 1990 coal production was 1.029 billion short tons, peaking at 1.172 billion short tons – by 2011 coal production had dropped to 1.096 billion short tons. In the first 8 months of 2012, it had dropped to 684.8 million tons, down from 718.8 produced during the first 8 months of 2011.
In 1989 when the Berlin Wall fell, the average price of electricity per kilowatt hour 8.0 cents. In April 2002, it was 8.8 cents. In August 2012, the average price was 13.3 cents.
In 1989 the average price for a gallon of unleaded gasoline was 99.9 cents a gallon. In August 2012, it was $3.71. Had the price for a gallon of gas increased at the rate of inflation since 2002, it would now be only $1.86.
According to the Bureau of Economic Analysis, real gross domestic private investment declined to just 80.2 percent of what it had been in 2005, while real gross domestic government investment increased to 101.9 percent of what it had been in 2005. Overall investment, including both the private sector and government, declined to only 83.6 percent of what it was in 2005.
Foreign aid distributed by the government hit a ten year low of $11.427 billion in 2008 according to the U.S. Treasury. By 2011, it had increased 80% to $20.599 billion.
In fiscal year 2002, the U.S. spent $402.3 billion in constant inflation adjusted 2005 dollars on national defense, according to the Office of Management and Budget. By fiscal 2012, the government spent $604.7 billion in constant inflation adjusted 2005 dollars. Since 2002, real national defense spending has increased by 50%.
In November 1989, 66.6% of the American civilian population, age 16 and up, participated in the work force – meaning they either had a job or were actively looking for work. By September 2012 that number decreased to 63.6%.
In November 1989 there were 124,637,000 Americans in the civilian labor force. From 1989 through 1999 the labor force grew by 15,388,000 – an average annual increase of around 1.54 million.
From November 1999 to November 2009, the labor force grew an additional 13,8 million to 153,833,000 – an average annual increase of about 1.38 million.
From November 2009 to September 2012, the labor force grew by 1.23 million to 155,063,000 – an average monthly increase of about 37,273, or an annual pace of only 447,276.
In August 2012, the number of Americans NOT in the labor force – meaning they are at least 16, not in the military or in an institution, and are not looking for a job – hit a record high of 88,921,000.
From 1981 through 1990, the average annual growth of real Gross Domestic Product was 3.27 percent according to the Bureau of Economic Analysis. From 1991 through 2000, it was 3.42 percent. Over the last 11 years (2001-2010) it has been 1.56 percent – not even half the average of the previous two decades. In 2011, it was 1.8 percent.
In 1989, 31.5 million Americans (12.8%) lived below the poverty level, according to the Census Bureau. In 1999, 32.8 million (11.9%) lived below the poverty level. In 2009, 43.6 million (14.3%) of the population lived below the poverty level. In 2011 46.2 million (15%) of the population lived below the poverty level.
At the end of November 1989, according to the U.S. Treasury, the total debt was $2.9 trillion. At the end of November 1999, it was $5.7 trillion. At the end of November 2009, the federal debt stood at $12.1 trillion. At the close of business on Tuesday, October 9, 2012, the federal debt stood at $16,167,932,295,919.57.
Since the Berlin Wall fell in November 1989, the government debt has increased by $13,244,342,295,919.57. That works out to be an additional $115,225 in debt for each of the 114,328,000 households.
History proved the CIA assessment of the Soviet Union correct. Without some drastic changes in our economic policies, America will follow suit!
Source: CNN, Terence Jeffrey “Reduced Growth – Something Will Have To Give”