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This Graph Should Scare You Regardless Of What Side You Are On

Posted by on Nov. 18, 2012 at 5:30 PM
  • 25 Replies
1 mom liked this

This graph should scare you

A new study from the Congressional Budget Office starts with the scariest graph you’ll see today.

Source: Congressional Budget Office

In other words, you’re not imagining it: This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession. Growth has been 9 percent below what was seen in past recoveries on average in its first three years. The CBO report tries to disentangle where that underperformance is coming from and its answer is deeply unsettling: The U.S. economy just isn’t as good at growing as it used to be.

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. While it has grown consistently through modern U.S. history (we can thank a growing population and steadily improving technology for that), it doesn’t always grow at the same rate. In periods when baby boomers were reaching their working years and women were entering the workforce in large numbers, the rate at which potential GDP rose was very high, over 4 percent at times, by the CBO’s reckoning.

In recent years, though, those trends have reversed. Baby boomers are starting to retire and the proportion of women who work has leveled off. The CBO’s estimate of potential GDP was rising at gradually steady rates for most of the 2000s even before the great recession hit, and has continued that downward trend since then.

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. “Although some of the sluggishness of potential GDP since the end of the last recession can be traced to unusual factors in the current business cycle, much of it is the result of longterm trends unrelated to the cycle, including the nation’s changing demographics,” the study said.

But even with that slower rate of growth in the nation’s economic potential, the United States still has a very large gap: $973 billion separating what the economy could be producing from what it is producing, about 6 percent of potential GDP, and unprecedented in modern U.S. history three years after a recession ended.

So what the CBO study is really saying is that there remains a gigantic cyclical gap in the U.S. economy, and this recovery has been awfully slow. And it has also occurred at a time when our potential economic growth isn’t rising as fast as it used to, mainly for reasons unconnected to the unique impact of the financial crisis. And while both those trends are big, the second one is bigger than the first.

Although social issues create much passion in our American lives, the most important fact is that if we aren't economically strong as a nation, nothing else really matters.  Currently, we are seeing a trend that really should scare all Americans regardless of what side of the aisle you are on.

by on Nov. 18, 2012 at 5:30 PM
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Replies (1-10):
Canvas_says
by Silver Member on Nov. 18, 2012 at 5:35 PM
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It was on one of the news programs that I was watching live that they explained that with our very slow crawl out of the recession we are looking at at least another ten years to just get back everything we have lost in the past four years. And who knows what changes between now and then. 

mustbeGRACE
by Silver Member on Nov. 18, 2012 at 5:41 PM
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You all realize that there's a vast group  of people to whom  this will mean nothing?

jaxTheMomm
by Gold Member on Nov. 18, 2012 at 5:46 PM
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This is very true:

Quote:

This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession.

However, this isn't a usual recession.  It has long been called a very unusual recession that will take a long time to recover from. 

So no, I wouldn't say I'm "scared" necessarily, because I've known this to be the case for a while now.

imamomzilla
by on Nov. 18, 2012 at 5:56 PM
7 moms liked this

Ugh.

 As the economy is limping by, the liberals proclaim..."It's doing just fine!"

Morons.

7SportsMom7
by Bronze Member on Nov. 18, 2012 at 6:08 PM
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I can appreciate your last comment (in red) ... and although scared may be a strong word I believe there is definitely cause for serious concern.  And, because it has been an unusual recession and our future is unknown, I do hope people will begin to focus on it more than social issues right now.  

Quoting jaxTheMomm:

This is very true:

Quote:

This economic recovery has been a big disappointment relative to what the United States has usually experienced after a recession.

However, this isn't a usual recession.  It has long been called a very unusual recession that will take a long time to recover from. 

So no, I wouldn't say I'm "scared" necessarily, because I've known this to be the case for a while now.


blues_pagan
by on Nov. 18, 2012 at 6:53 PM
5 moms liked this

I think it is sad that progress has been so slow.  I find it even sadder that instead of pulling together to figure out how to fix it, all our politicians (and even ourselves) are doing is fighting each other because we don't want to play nicely with each other.  Both sides have made so many mistakes that we can't steadily point the finger at any one person or party.  What needs to happen now, Republicans need to compromise and allow taxes to be raised on the rich (aka the Buffet Tax) while keeping tax cuts for people making below 250,000/yr.  Democrats need to compromise as well and start looking to slash the budget, which includes "entitlement" programs as well as our big spenders in the defense category.

7SportsMom7
by Bronze Member on Nov. 18, 2012 at 7:05 PM
4 moms liked this

I agree and what I what I fear just as much is the greed for power among our politicians.  I'm so cynical right now and have very little faith that any elected offical really wants to do the right thing by our country.  The future seems bleak too, because I can't imagine how anyone with the right values would even want to enter the corrupt game of politics.

Quoting blues_pagan:

I think it is sad that progress has been so slow.  I find it even sadder that instead of pulling together to figure out how to fix it, all our politicians (and even ourselves) are doing is fighting each other because we don't want to play nicely with each other.  Both sides have made so many mistakes that we can't steadily point the finger at any one person or party.  What needs to happen now, Republicans need to compromise and allow taxes to be raised on the rich (aka the Buffet Tax) while keeping tax cuts for people making below 250,000/yr.  Democrats need to compromise as well and start looking to slash the budget, which includes "entitlement" programs as well as our big spenders in the defense category.


Carpy
by Platinum Member on Nov. 18, 2012 at 7:11 PM
6 moms liked this

Sadly, yes.

Quoting mustbeGRACE:

You all realize that there's a vast group  of people to whom  this will mean nothing?


mustbeGRACE
by Silver Member on Nov. 18, 2012 at 7:12 PM
3 moms liked this

I think it's of paramount importance  that Democrats get nothing they want from here on in.

NADA.

Sisteract
by Socialist Hippie on Nov. 18, 2012 at 8:29 PM
1 mom liked this

Global economy- all in the context of a global economy-

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