The Step Down In Long-Term US Growth Rates Breaks Lower

From 1974 to 2007, the long-term US growth rate in real GDP generally fell between 3-3.5% on annualized basis (excluding the v-shaped bounce from 1982-1984). We define long-term here by looking at the 10-year annualized percentage change. With the 1Q now in the books, this series just dropped to an all-time low of 1.46%.





Long-term nominal growth has been on the decline since peaking at nearly 11% in 1981. It has since steadily fallen to a new post-WW2 low of 3.29%.



High interest rates are not to be blamed for the slowdown in growth. The long-term nominal growth rate has remained above long-term interest rates almost without interruption since 2000.




Lastly, unlike the majority of the 1977-2011 period, consumers have (hopefully) been able to sock away some savings as the long-term growth rate in personal income has recently outpaced the long-term growth rate in personal consumption expenditures by 37 basis points.