America's Slow but Steady Decline
The American economy has changed over the last 60 years. We experience fewer recessions, true, but overall our rate of growth has slowed. This should be obvious - ignoring the exponential advances in solid-state electronics, are there any startling developments in our lives today that would shock anyone living in 1947 (the way, say, a B-47 would have shocked someone living in 1887)?
If we look at our GDP growth over the past 60 years, we can see the decline rather clearly:
The blue represents a 5 year moving average of annual GDP growth. You can see it's general decline over the past 60 years. The red bars represent the average annual growth during boom times, while the yellow are the averages during recessions (based on NBER peak-to-trough periods). The fifties were marked by several short, deep recessions, followed by strong spurts of growth before the extended boom of the sixties. In the 70's and 80's the good times are pretty good despite several tough years. But the much touted go-go 90's featured a rather mediocre rate of growth, while the growth between recessions this decade was rather anemic (and mostly fraudulent, as it turns out).
So given the rather pallid showing of late, it's not too encouraging that our exit from this recession will be accompanied by ever more massive levels of debt. I suppose if the private sector can manage to shed the bulk of its debt, and Obama's "green investments" actually pay off with some revolutionary technologies there might be a way out of this death spiral. Are you holding your breath?
Source: Bureau of Economic Research. Average growth rates are calculated as simple arithmetic averages of annualized quarterly changes in GDP over the specified period. For example, the average over a 5 quarter period would be the sum of [(Gq - Gq-1)^4 - 1] for each quarter (q) divided by 5.
If we look at our GDP growth over the past 60 years, we can see the decline rather clearly:
The blue represents a 5 year moving average of annual GDP growth. You can see it's general decline over the past 60 years. The red bars represent the average annual growth during boom times, while the yellow are the averages during recessions (based on NBER peak-to-trough periods). The fifties were marked by several short, deep recessions, followed by strong spurts of growth before the extended boom of the sixties. In the 70's and 80's the good times are pretty good despite several tough years. But the much touted go-go 90's featured a rather mediocre rate of growth, while the growth between recessions this decade was rather anemic (and mostly fraudulent, as it turns out).
So given the rather pallid showing of late, it's not too encouraging that our exit from this recession will be accompanied by ever more massive levels of debt. I suppose if the private sector can manage to shed the bulk of its debt, and Obama's "green investments" actually pay off with some revolutionary technologies there might be a way out of this death spiral. Are you holding your breath?
Source: Bureau of Economic Research. Average growth rates are calculated as simple arithmetic averages of annualized quarterly changes in GDP over the specified period. For example, the average over a 5 quarter period would be the sum of [(Gq - Gq-1)^4 - 1] for each quarter (q) divided by 5.
posted by ziel | 7/02/2009 08:04:00 AM
6 Comments:
Succinct but important post.
The interesting question is the reason for this. I think one important reason is the transition of the US from the world's largest oil producer to the world's largest net energy consumer. Likewise, the decline of British coal reserves has not been recognized as much as it should be for the decline of the British Empire.
Had the US dissolved the anti-communist coalition after the fall of the Soviet Union and concentrated on domestic reform, US influence would have decreased but individual Americans would have been much better off. And with the course the elites took, eventually US influence will end anyway through a backlash or bankruptcy.
The decline is going to get a lot steeper when Peak Oil hits.
Very true, peak oil could well decimate us before we get to develop any new energy sources.
Ammianus, good to see you writing again. Loved your account of that little embarassment at Adrianople.
This decline is truly depressing. Instead of getting bigger and better, we're getting bigger and dumber/clumsier. The liberal approach that we have to ensure everyone's happiness drives me nuts. Meanwhile, the Republicans stick to the old "cut taxes/smaller government" mantra which makes Obama's "green technology" seem innovative and fresh.
Maybe what we need is a good old fashioned war. What inspires invention and production better than war? And with millions of people walking around with a chip on their shoulder, we've got more than enough belligerance to go around. Who's better than the good ole USA at kicking butt anyway?
By the way, I'm just postulating here, not seriously suggesting that we go to war.
Depressing conjecture, Figgy, though it seems like a plausible response to serious US decline.
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