Category Archives: gdp

China COVID Lockdowns, Ukraine Invasion Sanctions Continue Shrinking Earth’s GDP

The latest view from the volcano points to a higher level of economic gloom for the global economy.

The explanation for that worsening situation is the same as last month: the expanding economic sanctions imposed against Russia following its invasion of Ukraine and, more significantly, China's government's continuing lockdown of Shanghai that threatens to expand to other areas of China.

We're seeing the effects of both situations show up at the remote Mauna Loa Observatory, located atop a volcano on the big island of Hawaii in the middle of the Pacific Ocean, which measures the concentration of carbon dioxide diffused in the Earth's atmosphere. The following chart reveals the sharp, steep decline in the pace at which carbon dioxide is being added to the Earth's atmosphere since February 2022.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - April 2022

The following tool may be used to convert the decline in the rate of CO₂ accumulation into an estimate of the net GDP loss in the global economy associated with it. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Change in Atmospheric Carbon Dioxide
Input Data Values
Change in Carbon Dioxide in Atmosphere [Parts per Million]
World Population [billions]

Change in Amount of Carbon Dioxide Emitted into Atmosphere
Calculated Results Values
Carbon Dioxide Emissions [billions of Metric Tonnes]
Estimated Net Change in World GDP [trillions]

Using the default value of a -0.27 parts per million to account for the change in the rate of growth of atmospheric carbon dioxide since February 2022, we find the equivalent net loss to global GDP attributable to the spread of COVID in southeast Asia and to China's fossil fuel shortage is $9.0 trillion. Going back to the beginning of the coronavirus pandemic in December 2019, the reduction of 0.92 part per million in the rate at which carbon dioxide is being added to the Earth's air corresponds to a net loss to global GDP of $30.6 trillion.

Analyst's Notes

We've updated the population data entry in the version of the tool presented above to reflect Earth's estimated 2021 population. Otherwise, the methodology behind the tool is unchanged from when we first introduced it in 2020.

Meanwhile, since we've forayed into planetary level economic analysis, we should note it has been five months since we developed the first-ever estimate of Mars' GDP. We're about a month away from the end of the latest Martian quarter and our next estimate of Mars' GDP, which is coming due because Martian quarters are roughly twice as long as business quarters on Earth.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 5 May 2022. Accessed 5 May 2022.

U.S. Central Intelligence Agency. World Factbook. 1 July 2021 Population Estimate (World). [Online Article | Archived Document]. Accessed 8 May 2022.

Earth’s Economy Continued Cooling in November 2021

Going by the reduction in the rate at which carbon dioxide is accumulating in the Earth's atmosphere, November 2021 saw a net reduction in economic activity on the planet.

Since July 2021, much of that decline is associated with COVID-related disruptions of manufacturing production in southeast Asia, and also a shortage of fossil fuels that developed in China, which forced the Chinese government to shutter energy-intensive manufacturing. While both situations have somewhat abated, their disruptions still negatively affect the world's economy given the region's relatively "early" position in global supply chains.

A good example of that impact can be seen in the global market for new steel and aluminum production, where Chinese foundries provide the materials used within the country and elsewhere in the world for higher value production. China's production of steel and aluminum has fallen significantly in the last several months. That reduction has created shortages of materials for other countries like Germany, whose economic output has been greatly reduced as a result.

Here's a chart showing the continued decline in the rate at which human economic activities are adding carbon dioxide to the Earth's atmosphere.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - November 2021

Since December 2019, a net reduction of 0.74 parts per million of atmospheric carbon dioxide has been recorded in the trailing twelve month average of the year over year rate of change in atmospheric carbon dioxide levels measured at the remote Mauna Loa Observatory. We estimate this change represents a net loss of $24.6 trillion to the world economy since the coronavirus pandemic originated in China at this time. Approximately a third of that decline has taken place since July 2021.

Meanwhile, on Mars, economic output has hit an all time high, but that's mainly because the red planet's GDP is now greater than zero. More on that story here from your sole source of planetary scale economic reporting!

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 6 December 2021. Accessed 6 December 2021.

Previously on Political Calculations

Here is our series quantifying the negative impact of the coronavirus pandemic on the Earth's economy, presented in reverse chronological order.

The Birth of the Martian Economy

A little over three months ago, a momentous event passed with little notice. The economy of the planet Mars came into existence.

The occasion was marked in Nature, though neither the author of the report nor those directly involved in the achievement were fully aware of the significance of what they achieved on 6 September 2021. Here's the basic story of the accomplishment as they understood it:

After a failed attempt last month, NASA’s Perseverance rover has successfully drilled, extracted and stored a sample of Martian rock — the first ever Mars sample destined to be flown back to Earth for study.

“This is a momentous achievement,” said NASA administrator Bill Nelson in a statement.

When the rover first attempted the manoeuvre, on 6 August, the rock it was trying to sample crumbled into powder before making it into a sample tube. The second attempt, on 1 September at a different location several hundred metres away, went smoothly: the drill bit pulled a slim cylinder out of a 70-centimetre-long rock named Rochette. Engineers then paused the process so that they could photograph the core in its sample tube, to ensure it was intact, before sealing the specimen inside days later, on 6 September.

The core from Rochette now rests in Perseverance’s belly, hermetically sealed and ready to wait many years until future spacecraft can retrieve it and any other cores the rover manages to collect. The goal is to gather about 35 cores representing the geological history of Jezero Crater, Perseverance’s landing site — which was home to a river delta billions of years ago and might contain evidence of ancient Martian life.

Here's a short one-minute video documenting the Perseverance probe's drilling operation:

To be sure, this is not the first drilling operation on Mars, nor it the first time a rock sample has been moved or examined by an automated rover or lander on Mars. What makes this remote, robotically-performed operation different is what was done with the rock sample that was collected. It was put into inventory where it will remain stored until it might be exported from Mars.

These actions differentiate Perseverance's activity from all the missions to Mars that preceded it. That difference is meaningful in an economic sense, because it marks the first change ever recorded in the amount of inventory of a good produced for future interplanetary trade on Mars. We would argue this production along with the intent to transact or trade the produced good now being stored qualifies the production of the rock sample as a genuine economic activity. Without the intent to trade, the rover's work would not be meaningfully different from the activities of say a squirrel storing nuts or a roving herd of buffalo disturbing rocks while grazing on the prairie, which we don't think anyone would classify as economic events.

Let's put an economic value on the rover's economic activity. In this case, the cylindrical rock sample that is approximately 13-mm in diameter and 60-mm long, or rather, 7,964 cubic millimeters in volume. On 23 February 2021, Christie's auctioned a Martian meteorite sample measuring 91 mm x 79 mm x 2 mm (a volume of 14,378 cubic millimeters) for $40,000. Assuming the meteorite's material has a similar density, that would give an estimated value of Perseverance's first Martian rock sample of $22,156.

That's a low end estimate. Christie's also auctioned a smaller sample, measuring 26 mm x 12 mm x 2 mm (a volume of 624 cubic millimeters), for $13,760. If that price is more reflective of the value of the first rock core sample currently held in inventory on Mars, its value would be $175,616.

Since then, the Perseverance rover has collected two more samples. Therefore, based on what we know today, the first estimate of Mars' GDP can be found by multiplying the estimated value of one of its rock samples by three. The product of that math has a huge error band, likely falling somewhere between $66,468 and $526,848 during the current Martian quarter!

The real question though is this the right way to go about estimating GDP on a faraway planet with a robotic population? What really does qualify as economic production in this case? Do any non-human actions qualify as economic activity?

If you can answer these questions, well, the sky is no longer the limit, is it?

Celebrating Political Calculations' Anniversary

Our anniversary posts typically represent the biggest ideas and celebration of the original work we develop here each year. Here are our landmark posts from previous years:

  • A Year's Worth of Tools (2005) - we celebrated our first anniversary by listing all the tools we created in our first year. There were just 48 back then. Today, there are over 300....
  • The S&P 500 At Your Fingertips (2006) - the most popular tool we've ever created, allowing users to calculate the rate of return for investments in the S&P 500, both with and without the effects of inflation, and with and without the reinvestment of dividends, between any two months since January 1871.
  • The Sun, In the Center (2007) - we identify the primary driver of stock prices and describe a whole new way to visualize where they're going (especially in periods of order!)
  • Acceleration, Amplification and Shifting Time (2008) - we apply elements of chaos theory to describe and predict how stock prices will change, even in periods of disorder.
  • The Trigger Point for Taxes (2009) - we work out both when, and by how much, U.S. politicians are likely to change the top U.S. income tax rate. Sadly, events in recent years have proven us right.
  • The Zero Deficit Line (2010) - a whole new way to find out how much federal government spending Americans can really afford and how much Americans cannot really afford!
  • Can Increasing the Minimum Wage Boost GDP? (2011) - using data for teens and young adults spanning 1994 and 2010, not only do we demonstrate that increasing the minimum wage fails to increase GDP, we demonstrate that it reduces employment and increases income inequality as well!
  • The Discovery of the Unseen (2012) - we go where so-called experts on income inequality fear to tread and reveal that U.S. household income inequality has increased over time mostly because more Americans live alone!

We marked our 2013 anniversary in three parts, since we were telling a story too big to be told in a single blog post! Here they are:

  • The Major Trends in U.S. Income Inequality Since 1947 (2013, Part 1) - we revisit the U.S. Census Bureau's income inequality data for American individuals, families and households to see what it really tells us.
  • The Widows Peak (2013, Part 2) - we identify when the dramatic increase in the number of Americans living alone really occurred and identify which Americans found themselves in that situation.
  • The Men Who Weren't There (2013, Part 3) - our final anniversary post installment explores the lasting impact of the men who died in the service of their country in World War 2 and the hole in society that they left behind, which was felt decades later as the dramatic increase in income inequality for U.S. families and households.

Resuming our list of anniversary posts....

Fossil Fuel Shortages Shrink World GDP

After COVID-19 disrupted the regional economy of Southeast Asia in July and August 2021, we're seeing a new factor behind recessionary forces affecting the Earth's GDP: fossil fuel shortages.

China has been coping with shortages of both coal and oil since August 2021, with now widespread power outages disrupting its economic output from September 2021 into October 2021. Since the country is the world's largest emitter of carbon dioxide by a very wide margin, the impact of its forced blackouts are already showing up in the measurements of atmospheric carbon dioxide concentration at the remote Mauna Loa Observatory in the Pacific Ocean.

The following chart shows that change as the steeping decline in the pace at which carbon dioxide is being added to the Earth's atmosphere since July 2021.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 2000 - September 2021

Since December 2019, a net reduction of 0.65 parts per million of atmospheric carbon dioxide has been recorded in the trailing twelve month average of the year over year rate of change in atmospheric carbon dioxide levels measured at the remote Mauna Loa Observatory. Since June 2021, a net reduction of 0.18 parts per million have been recorded. We can convert both these changes into an estimate of the lost GDP for the global economy using the following tool. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Change in Atmospheric Carbon Dioxide
Input Data Values
Change in Carbon Dioxide in Atmosphere [Parts per Million]
World Population [billions]

Change in Amount of Carbon Dioxide Emitted into Atmosphere
Calculated Results Values
Carbon Dioxide Emissions [billions of Metric Tonnes]
Estimated Net Change in World GDP [trillions]

Using the default value of a -0.18 parts per million to account for the change in the rate of growth of atmospheric carbon dioxide since June 2021, we find the equivalent net loss to global GDP attributable to the spread of COVID in southeast Asia and to China's fossil fuel shortage is $6.0 trillion. Going back to the beginning of the coronavirus pandemic, the reduction of 0.65 part per million in the rate at which carbon dioxide is being added to the Earth's air corresponds to a net loss to global GDP of $21.6 trillion.

Looking forward, the coal shortage has begun to affect India's economy, with reports of power outages in the country's northern states.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 5 October 2021. Accessed 5 October 2021.

Previously on Political Calculations

Here is our series quantifying the negative impact of the coronavirus pandemic on the Earth's economy, presented in reverse chronological order.

World GDP Still Shrinking from Coronavirus Pandemic

The triple dip global recession from the coronavirus pandemic continued deepening in July 2021.

Evidence supporting that conclusion is visible in the falling rate at which carbon dioxide is being added to the Earth's atmosphere. The trailing year average of that rate continued to fall in July 2021, as shown in the latest update to the chart tracking its history since January 1960.

Trailing Twelve Month Average of Year-Over-Year Change in Parts per Million of Atmospheric Carbon Dioxide, January 1960 - July 2021

Since December 2019, a net reduction of 0.49 parts per million of atmospheric carbon dioxide has been recorded in the trailing twelve month average of the year over year rate of change in atmospheric carbon dioxide levels measured at the remote Mauna Loa Observatory. We can convert that change into an estimate of the lost GDP for the global economy using the following tool. If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version of the tool.

Change in Atmospheric Carbon Dioxide
Input Data Values
Change in Carbon Dioxide in Atmosphere [Parts per Million]
World Population [billions]

Change in Amount of Carbon Dioxide Emitted into Atmosphere
Calculated Results Values
Carbon Dioxide Emissions [billions of Metric Tonnes]
Estimated Net Change in World GDP [trillions]

Using these default values, we estimate the net loss to global GDP since the SARS-CoV-2 coronavirus emerged in China and began impacting the world economy is closing in on $16.3 trillion.

References

National Oceanographic and Atmospheric Administration. Earth System Research Laboratory. Mauna Loa Observatory CO2 Data. [Text File]. Updated 5 August 2021. Accessed 5 August 2021.

Previously on Political Calculations

Here is our series quantifying the negative impact of the coronavirus pandemic on the Earth's economy, presented in reverse chronological order.