Category Archives: U.S. recovery

28/7/17: Long term U.S. growth trend is still weak: 2Q 2017 Update


U.S. GDP growth estimate for 2Q 2017 came in at 2.6%, matching the post-1948 trend for expansionary periods almost to the notch. The problem, however, is that the trend is ... declining over time.

Here's the kickers to today's cheerful media reports on U.S. growth:

  1. Current expansion period average growth remains the shallowest amongst all post-recession recoveries since the end of WW2. That's right: the miracle of this Great Recovery is how weak it has been, despite all the Fed efforts.
  2. Current 4 quarters average for growth is 2.4%, which is only 0.2 percentage points above the overall recovery period average. Or, put differently, even before the revisions to 2Q 2017 numbers, last four quarters of growth have been un-inspiring. 
  3. The trend for historical growth during expansion periods has been sloping down since around the end of the 1980s. And we are, currently, still on that trend. In other words, recoveries are continuing to trend more anaemic over time.
So keep telling yourself that everything is coming out 'on expectations'. Just don't think about the pesky fact that expectations are trending lower.

3/5/16: U.S. Recovery: It’s Poor, Judging by Historical Comparatives


Recent research note from Deutsche covering the U.S. economy posted an interesting chart on the U.S. growth dynamics since 1980:
The note, of course, makes the point about volatility of the GDP growth in the current recovery not being out of the ordinary. But the average rate of growth in the chart above is.  Which means one little thingy: the average rate of growth is structurally lower in the present episode than in the previous three post-recession recoveries. And that is before we look at the peak-to-trough falls in GDP during the recession which was more dramatic than in any previous recession plotted in the chart. Average rate of growth in the current recovery falls outside the -1STDEV range for two out of three previous recoveries.

So here we have it: recovery is not robust. Not even strong. It is, quite frankly, very poor.