The Fall of American Growth?
On October 27 the Bureau of Economic Analysis estimated that the real Gross Domestic Product (GDP) during the third quarter of this year grew at a rate of 3.0% (GDP is defined as the market value of all goods and services produced in the United States). Since GDP grew at only 2.2% during the first half of the year, it is very likely that 2017 will mark the 12th consecutive year in which the GDP failed to grow at or above 3.0%.
This extended period of less than 3% annual real GDP growth is often cited as one of the factors giving rise to the turbulent political environment in the United States and is, indeed, unprecedented. Beginning in 1929, the next longest period during which the US economy failed to grow at a 3% or above rate, was the four year period from 1930-1933, i.e., the depression. Otherwise the GDP grew faster than 3% in 47 of the 76 years from 1930 through 2005, averaging a 3.6% annual growth rate, more than double the 1.5% average rate from 2006-2016.
Unsurprisingly, the extended period of less than 3% growth in real GDP has captured the attention of economists, and generated a debate about the causes and meaning of this development. One view is exemplified by Robert Gordon, a professor at Northwestern (Ph.D., MIT; Masters, Oxford; B.A., Harvard), in his recent magnum opus, The Rise and Fall of American Growth, The U.S. Standard of Living Since The Civil War.