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In the twentieth century, per capita output in the U.S. increased by about eight-fold. This rapid
economic growth caused large improvements in the quality of life for the average American.
Example 6: In 1900, the poverty rate was about 90%. In 2000, the poverty rate was about 12%.
In 1900, 3% of American households had electricity, 33% had indoor plumbing, and 15% had an
indoor toilet. In 2000, among Americans below the poverty line, 46% owned their own homes,
76% had air conditioning, and 97% owned at least one color television. In 1900, there were 8,000
automobiles in the U.S. and 14 million horses. In 2000, there were 5 million horses and 200
million automobiles. Life expectancy for Americans increased from 47 years in 1900 to 77 years
in 2000. (Life expectancy increased to 79 years by 2012.) In the twentieth century, the infant
mortality rate in America decreased by 95% (from 14% in 1900 to .7% in 2000).
In many ways, even a wealthy American in 1900 would have been at an economic disadvantage
compared to the average American in 2000. In 1900, there were no airplanes, no radio, no
television, no cell phones, no penicillin, no open-heart surgery, no organ transplants, no
computers, and no air conditioning.
Will the rapid pace of economic growth continue in the twenty-first century? Per capita Real GDP
increased from $44,557 in 2000 to $47,674 in 2010 (measured at the 2009 price level). This was
the weakest decade for per capita economic growth since 1930. (See the table on page 14-2.) If
the rate of economic growth in the twenty-first century matches the rate of growth in the twentieth
century, by the year 2100 per capita output in the U.S. will increase to about $356,000 (measured
at the 2009 price level).
The U.S. economy is by far the largest in the world, producing over $17 trillion worth of output in
2014. Per capita output was about $54,000 in 2014, which is the highest of any of the thirty-five
largest national economies. A table in an appendix to this chapter lists the 35 largest national
economies for the year 2013.
Appendix: Book Review – “The Progress Paradox”
In 2003, Gregg Easterbrook published “The Progress Paradox”, subtitled “How Life Gets Better
While People Feel Worse”. In the book, he details some of the many ways in which contemporary
American life grows steadily better. He also tries to explain why so many Americans fail to
appreciate the improvement, or even deny that the improvement is happening.
Easterbrook asserts that the great story of the current era is that average people are better off.
Among the statistics that Easterbrook gathers to support this view are:
1. Per capita income in the U.S. more than doubled from 1960 to 2000, after inflation.
2. The median family income of African-Americans has been rising twice as fast as the median
family income for the United States as a whole.
3. In the year 2000, almost 23 percent of American households had an income of at least
$75,000. In 1890, less than 1 percent of American households earned the equivalent of
$75,000, in inflation-adjusted dollars.
4. Almost 70 percent of Americans owned their homes in 2000, versus less than 20 percent a
century earlier.
5. American housing stock has increased to the point that there are, on average, two dwelling
rooms per person. Most European nations have less than one dwelling room per person.
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6. In 1900, 42 percent of men in the labor force were employed in mining, forestry, fishing, and
farming. 47 percent of women in the labor force were employed as domestics. Today, the
majority of both men and women in the labor force have white-collar jobs.
Intro - 3
A Brief History of U.S. Economic Growth