When the first estimate for US GDP was release, we showed how the long-term growth rate of the US economy has been steadily falling for decades. We highlighted this by looking at the 10-year annualized percentage change in nominal and real GDP. With the final estimate for 1Q GDP release this morning, we thought we would again visually explore the changing US structural growth rate by using growth trend lines. In each chart below, we plot either real or nominal GDP against 1-7% compounding growth trend lines over various time frames. We index all series to 100 at the beginning chart date. Using these charts is a simple and effective way of seeing how economic growth rates are changing in the United States.
Let’s begin with nominal GDP. The Bureau of Economic Analysis (BEA) began tracking GDP in 1947. Since 1947, nominal GDP has increased a 6.5% annualized rate. The growth rate has generally been between 6% and about 7.25% consistently since 1947. The main takeaway of the charts below is that while the recovery since the past recession has grown at a faster pace than the annualized growth rate of the last decade, the financial crisis seems to have to have moved longer-term growth rates into a lower trajectory.
Over the past 30 years, nominal GDP has been compounding at a 4.83% annualized rate. Prior to the last recession, growth rates since 1985 were consistently above 5%.
Over the past 20 years, nominal GDP has been compounding at a 4.31% annualized rate. Prior to the last recession, growth rates since 1995 were consistently above 5%.
Over the past 10 years, nominal GDP has been compounding at a 3.15% annualized rate.
Lastly, since the recession officially ended 6/30/2009, nominal GDP has been compounding at a 3.72%, so a slightly higher rate than 10-year annualized growth rate.
Moving on the real GDP, over the past 68 years US real gdp has grown at an annualized rate of 3.18%. From 1947 to 1974, real GDP grew fairly consistently at about 4%. Growth has slowed since that 1970s recession.
Over the past 30 years, US real GDP has grown by a 2.60% annualized rate. Once again, however, we see that the latest recession moved growth from an above 3% rate to below 3% on annualized basis.
Over the past 20 years, US real GDP has grown by a 2.41% annualized rate. Prior to the last recession, growth rates since 1995 were consistently above 3%.
Over the past 10 years, US real GDP has grown by a 1.40% annualized rate.
Lastly, since the recession officially ended 6/30/2009, real GDP has been compounding at a 2.22% rate. Again, during the recovery the US has had a slightly higher growth rate than the annualized growth rate over the last decade.
