Great one year of contraction .However it is much worse then that when you start to measure everything on a real per capita basis. Population alone expands by 1% globally and inflation say runs around 2%. Add it up and it seems like we need about 3% overall nominal growth in order just to keep up. No wonder governments no longer focus on real per capita numbers - otherwise, we would observe and conclude that have been in a global recession for many years.
The other problem with global GDP is what unit of measure provides a standard - is everything being converted to US dollars? Well, the US dollar has been debasing for the past decade. Its real global purchasing power is down by 25 to 30% the very least. Now, the argument may be made that we have actually been in a global depression for the past decade.
Now this is armchair economics, however one has a certain sense that numbers used by the media, government and other pundits just do not correlate with reality. Lets briefly look at what we face going forward over the next 10 to 25 years.
Minimal global GDP growth in debasing unit(s) of measures
Ever expanding populations growing faster than the nominal GDP
Depletion of raw materials critical to the production of consumable objects
Little in terms of technological breakthroughs expected - if Apple and Facebook are category leaders- we got problems.
Climate Change and Geo-Political issues will continue to draw more resources away from consumer production
It therefore looks like the global contraction is running a marathon well beyond the one year predicted by Mr Faber.
Dr Peter G Kinesa
November 26, 2012