Gerstner notes Fed raised its 2024 GDP forecast from 1.1% in June to 1.5% today.
“The Fed forecast in June of this year for GDP growth for 2024 was 1.1%. Today, the Fed forecast for GDP growth in 2024 is 1.5%. It went up.”
Gerstner says global GDP now doubles every 20 years versus every 100 years in the 1800s but prosperity is unequal.
“The period of time between 1800 and 1900, it was doubling every 100 years. Global GDP is now doubling every 20 years. But the prosperity is not distributed equally, right?”
Gerstner notes global GDP had almost zero increase from year zero to 1800 before growth began with Adam Smith.
“Up until the year 1800, the year '0 to 1800, there was almost zero increase, right, in human prosperity, almost zero GDP. Adam Smith, Wealth of Nations, 1780.”
Gerstner states expiring individual tax cuts are worth 150 billion dollars or 60 basis points of GDP.
“the individual tax cuts, which included increasing the child tax credit, the standard deduction, it's it's worth about a $150,000,000,000 a year to put it in perspective.”
Gerstner says GDP was flat for 1800 years then went parabolic after 1800.
“Eighteen hundred years, okay? Almost zero growth in GDP. And then just after the year 1800, you have this parabolic move in global GDP.”
Gerstner says US GDP per capita is 100x Nicaragua's today versus equal 100 years ago.
“The today, the GDP per capita of The United States to Nicaragua is a 100 x. Why? Right? We're living at a time where I think there's a lot of controversy about capitalism.”
Gerstner claims all human GDP growth occurred after America's founding and wealth of nations publication.
“So we have two thousand years, you have no GDP growth. And it all happens to magically line up with, you know, the founding of America, the wealth of nations, limited government, entrepreneurialism, etcetera.”
Gerstner calculates every $300 billion in cuts equals 1% GDP headwind, making $2 trillion cuts impossible without recession.
“The problem is every $300,000,000,000 you cut is a 1% headwind to GDP. So if you cut $2,000,000,000,000 in a single year, you have negative 7% GDP, right? It would throw us into a recession”
Gerstner argues cutting $2 trillion in one year would create negative 7% GDP and trigger recession.
“The problem is every $300,000,000,000 you cut is a 1% headwind to GDP. So if you cut $2,000,000,000,000 in a single year, you have negative 7% GDP, right?”
Gerstner notes technology grew from 3% of global GDP in 2000 to 15% today, likely to increase further.
“Back in 2000, technology represented about 3% of the global GDP. Today, it represents about 15 of global GDP, right?”
Gerstner calculates cutting $2 trillion in one year would create 800 basis point GDP headwind.
“You can't just cut 2,000,000,000,000 in a single year. That would be an 800 basis point headwind to GDP.”
Gerstner says AI added 100 basis points to GDP this year despite NVIDIA's 225% drawdowns.
“It added a 100 basis points to GDP this year. But remember, this year, we had 225% drawdowns in Nvidia.”
Gerstner claims AI investment is contributing over 100 basis points to US GDP growth this year.
“This is the single most important contributor to the GDP growth of The United States Of America this year. It's contributing over a 100 basis points of our GDP growth.”