Chart of the Day
Posted at 9:45 a.m. on Nov. 16, 2012
– US economic growth — as measured by inflation-adjusted GDP — has grown at a slower rate since the end of the 2008 recession than the country’s average pace after past recessions, via the Congressional Budget Office.
Neil Irwin: “The new CBO report claims that two-thirds of the underperformance of the economy over the past three years compared to a typical recovery is due to a slower rate of growth in potential GDP. Only one-third, in this analysis, is due to factors related to this recession. Potential GDP is the measure of what the economy is capable of producing if almost all of the people who want jobs are able to get one and almost all its machines and buildings were humming at their potential.”
“So part of what is showing up in the CBO’s analysis of how this recovery has proceeded since 2009 reflects the simple fact that earlier post-war recoveries took place in times when potential GDP was growing faster.”