I first look at innovation wave/leading sector stuff in the 1990's. Back then I saw the K-peaks in 1864, 1920 and 1981 and the period of strong growth afterward 4.7% (1866-73) 4.8% (1921-29) and 4.4% (1982-89) as the same points of time in the K-cycle. These periods were followed by downturns and then a period of very strong growth afterward: 8.9% (1877-81) and 9.4% (1933-37). Both of these periods occurred during growth phase of cluster of leading sectors, or "new economy" as Harry Dent puts it. The previous growth phases ended in 1888 and 1937 for the industrial and mass-market economy, respectively and the current one was forecasted to end in 2007. Based on this concept I anticipated strong growth in the late 1990's, not as strong as in 1877-81 or 1933-37, since these were coming off economic lows, but still stronger than what was saw in the 1980's. Didn't happen, growth over 1996-2000 was the same as in the 1980's.
This was all before generations. In 2000-1 I added the idea of generations to my thinking and concluded that the K-cycle was longer today than its historic 50-60 year length. Based on a correlation between the start of K-winter and the 4T in 1929, I took the apparent 2001 start of the 4T as evidence that K-winter began in 2000. This makes the economic boom over the 1982-2000 bull market cycle equivalent to the 1861-81 and 1921-29 bull markets, for which growth averaged 4.9% and 4.8%, respectively. Growth over the 1982-2000 bull averaged only 3.7%, a bit less but not way out of line.
But that wasn't right. We now think 2008 is a 4T start and I did confirm that 2008 was a 1929-equivalent economic event. So this means the analog to 1921-29 is now 1982-2007 for which average growth was only 3.2% due to poor growth of 2.7% over the 2001-2007 expansion. In other words during the growth phase of the information economy growth was strongest in the 1980's before the internet, when PCs and floppy disks were cutting edge. The addition of much more capable machines, capable hard drives, and the internet (which changed everything so said the stock market boosters in the nineties bubble) gave us slightly slower growth. Then after 2000, broadband, B2B and social media, brought us even slower growth. Adding smart phones since 2007 and a lot more social media hasn't helped--growth over 2009-15 was even slower at 2.2%. These leading sectors aren't powering growth like they used to. If what you say is true about all this huge spending on IT infrastructure creating growth, then it would show up in the numbers.
Back in 2004 when I counted up total employment in the industries I was using to track the information economy compared to 1970 employment in those I was using to track the mass-productive economy it appeared that the current cluster was about a third the size of the old one. The GDP growth figures also point to a much smaller size. If you wish to assert that out current leading sectors are as big as ever, where is the missing growth? We are taking about $6-7 trillion in GDP that should be here, but isn't.
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Also Germany did not begin industrialization when we did. Britain was first, they began the industrial revolution in ca. 1765. We followed about 30 years later. German industrialization did not get underway until mid 19th century and Japan a bit later. Korea started after WW II. The US never saw sustained growth levels much above 3-4%, whereas Japan and Korea saw faster growth rates and China faster yet The leading sector explanation for this is that the US exploited each leading sector cluster one at a time, as we had to wait for the net one to be innovated. Not so for the late comers. China is still industrializing like we did in the 19th century, until recently they were showing big growth in iron, steel, cement and commodity chemical production. At the same time they are rolling our their consumer good manufacturing economy like we did in the early and mid 20th century. But simultaneously they are rolling out the information and service economy, just as we are. So they have triple the leading sectors and so they see much stronger growth than we did when we were industrializing.
This was all before generations. In 2000-1 I added the idea of generations to my thinking and concluded that the K-cycle was longer today than its historic 50-60 year length. Based on a correlation between the start of K-winter and the 4T in 1929, I took the apparent 2001 start of the 4T as evidence that K-winter began in 2000. This makes the economic boom over the 1982-2000 bull market cycle equivalent to the 1861-81 and 1921-29 bull markets, for which growth averaged 4.9% and 4.8%, respectively. Growth over the 1982-2000 bull averaged only 3.7%, a bit less but not way out of line.
But that wasn't right. We now think 2008 is a 4T start and I did confirm that 2008 was a 1929-equivalent economic event. So this means the analog to 1921-29 is now 1982-2007 for which average growth was only 3.2% due to poor growth of 2.7% over the 2001-2007 expansion. In other words during the growth phase of the information economy growth was strongest in the 1980's before the internet, when PCs and floppy disks were cutting edge. The addition of much more capable machines, capable hard drives, and the internet (which changed everything so said the stock market boosters in the nineties bubble) gave us slightly slower growth. Then after 2000, broadband, B2B and social media, brought us even slower growth. Adding smart phones since 2007 and a lot more social media hasn't helped--growth over 2009-15 was even slower at 2.2%. These leading sectors aren't powering growth like they used to. If what you say is true about all this huge spending on IT infrastructure creating growth, then it would show up in the numbers.
Back in 2004 when I counted up total employment in the industries I was using to track the information economy compared to 1970 employment in those I was using to track the mass-productive economy it appeared that the current cluster was about a third the size of the old one. The GDP growth figures also point to a much smaller size. If you wish to assert that out current leading sectors are as big as ever, where is the missing growth? We are taking about $6-7 trillion in GDP that should be here, but isn't.
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Also Germany did not begin industrialization when we did. Britain was first, they began the industrial revolution in ca. 1765. We followed about 30 years later. German industrialization did not get underway until mid 19th century and Japan a bit later. Korea started after WW II. The US never saw sustained growth levels much above 3-4%, whereas Japan and Korea saw faster growth rates and China faster yet The leading sector explanation for this is that the US exploited each leading sector cluster one at a time, as we had to wait for the net one to be innovated. Not so for the late comers. China is still industrializing like we did in the 19th century, until recently they were showing big growth in iron, steel, cement and commodity chemical production. At the same time they are rolling our their consumer good manufacturing economy like we did in the early and mid 20th century. But simultaneously they are rolling out the information and service economy, just as we are. So they have triple the leading sectors and so they see much stronger growth than we did when we were industrializing.