When President Obama says his economic plan has worked, it’s unlikely that he means to highlight the results Gene Epstein reports in his latest “Economic Beat” column for Barron’s.
The U.S. economy has scored 12 calendar quarters of uninterrupted growth since the end of the Great Recession. That three-year performance has at least defied persistent fears of a second dip. But over these three years, growth has run just 2.2%, anemic by any measure.
Reach back to 1950, and examine all periods that exclude recessions, and you’ll find there has never been a three-year interval that ran as low as 2.2%.
In fact, in the 61½ years since 1950, annual gross domestic product growth has run 3.2%, and that includes all periods of contraction. Exclude the high-growth decades of the 1950s and ’60s, and the recent three years of 2.2% growth still come up short. Growth since 1970 has averaged 2.9%—and again, that includes all recessions.
Try handicapping the recent 12 quarters. The government portion of GDP usually increases, and over nine of the past 12 quarters, there has been a decrease.
And what if we remove the drag from government portion of gross domestic product? Then the recent period loses some of its record-breaking status. Private-sector real GDP has expanded by 2.5% over the 12 quarters, rather than 2.2%, and there are a handful of three-year periods since 1970 that did slightly worse.
But that’s hardly reassuring. Since 1970, private-sector GDP growth has also averaged 2.5%, and that includes all recessions. Moreover, the years immediately following severe downturns are normally periods of rapid growth. If this one had a class ranking, it would be near the bottom.
