We hate to be the Debbie Downers of the day, but we just plotted the graph below and felt we should share it. It plots real GDP for the United States from 1970 to 2013 using a logarithmic scale. If the red line were straight, that would imply that real GDP grew at a constant rate from 1970 to 2013.
The black dots represent the trend using the pre-2007 data. In other words, we estimate the trend growth rate the U.S. economy was on prior to the 2007 recession. The difference between the red line and the black dots represents the deviation from trend for the U.S. economy.
Two things jump out. First, in all other recessions, we returned to trend pretty quickly. Second, the Great Recession has taken what looks like a permanent toll on the U.S. economy. We went way off trend. We are not catching up. And if anything, it looks like we are getting further away from trend.
We did a similar exercise using retail spending in a previous post. But the result is even more startling using GDP.
Like we said, sorry to be Debbie Downers.