Since 2000, Too Weak to Sustain 4% Growth
Over the past three generations, the average annual GDP growth rate has been about 3.4%. That includes the Great Depression, recessions, and recoveries. When our economy has been in a recovery mode, we have seen growth of at least 4.0% level for long, sustained periods of time.
In every decade of the 20th century, including the 1930s, we achieved at minimum four quarters in a row of consistent high growth. In the 1930s, 10% was the growth rate in the three-year 1934-36 period. For 1940-43, we sustained an average growth of 15% for four years.
Using quarterly GDP growth figures starting in Q1 1951, the graph below plots 10 quarters at a time, or two and a half years, to smooth out the volatility and demonstrate economic performance over a sustained period.
For the first 10 quarters of the 1950s, our annual growth rate was 8.1%. In the early 1960s, we achieved a five-year, 20-quarter spurt of 6.3% growth per annum. In the early 1970s, the economy performed at a 6% rate over 10 quarters.
By mid-1985, we had completed 10 quarters of 6.2% average growth. That was followed immediately by 10 quarters of 3.9% average growth. Which was followed by 10 more quarters of 3.3% growth.
Starting with Q1 1992, we had 34 quarters of 4.0% average growth.
At the end of that period, in Q2 2000, America said good-bye to 4% sustained growth, and hello to 1.7%.
It has been 14 years since America’s economy has strung together 10 quarters of 4%. Is this 54-quarter period of 1.7% growth, including the Q1 2014 performance of -2.9%, the longest case of economic anemia in our history? Perhaps so.
Whatever it is that is retarding our growth, shaving off half the growth rate for 14 years straight has eliminated trillions in US wealth.
Since Q2 2000, Americans are producing more at an unprecedentedly slow rate. And yet government continues to grow happily at a 3 or 4% rate. Our elected officials are getting their rewards. Are you getting yours?
Americans have been sleep-walking into a soft tyranny of diminished private industry and increased central control. Calvin Coolidge said it best:
“I want the people of America to be able to work less for the government and more for themselves. I want them to have the rewards of their own industry. This is the chief meaning of freedom.
“Until we can reestablish a condition under which the earnings of the people can be kept by the people, we are bound to suffer a very severe and distinct curtailment of our liberty."