It is definitely more profound after the Great Recession, but it’s not new. Real growth of gross domestic product was 51 percent in the 1950s, 53 percent in the 1960s, 38 percent in the ’70s, 35 percent in the ’80s, 39 percent in the 1990s — and just 16 percent in the 2000s (and thanks to Steve Randy Waldman for the research via the St. Louis Fed).
The reasons behind much of the the deceleration aren’t difficult to pinpoint: The economies of Japan and Germany were rebuilt and became world competitors; much of American manufacturing was complacent to threats and didn’t invest enough to meet them, and America hit its national oil peak in the early 1970s and was much more vulnerable to OPEC. The Morning in America decade actually performed worse than the decade of malaise, and the trend was somewhat reversed in the 1990s.
As for the 2000s, my suspects are the rise of China and our unwillingness to protect American jobs and industries; two recessions brought on by corporate wrongdoing; inequality that left more Americans unable to improve their economic conditions and hence productivity; unproductive finance, and the opportunity costs of two wars.
The problem now is acute. If the country can’t find a way to move beyond 2-3 percent annual GDP growth, it faces a decade that could make the 2000s look good by comparison. It would also be good if, on an overpopulated planet facing climate change, we could begin to retool the meaning of growth. Build more tract houses or fund more engineering Ph.Ds? Burn more fossil fuels or invest in more sustainable transportation? It’s a conversation we’re not even having.
Today’s Econ Haiku:
Build fast, Amazon
I want a bigger skyline
Before the next bust