Call it the triumph of the "new normal."
At Reuters today, after today's first revision of third-quarter gross domestic product showed that the economy grew by an annualized 2.1 percent, up from the late-October estimate of 1.5 percent, reporter Lucia Mutikani and Editor Paul Simao demonstrated that they have completely given in to the artificially lowered expectations of past seven miserable years. Despite the fact that annual growth in the U.S. economy averaged 3.4 percent from 1946-2007 — a period which included ten recessions — and that it has seen four-year spurts averaging over 4 percent several times in the past three decades, the Reuters pair claims that its "long-run potential" is now only 2 percent, thus making today's 2.1 percent result "respectable."
Here is the paragraph in question:
Inventories boost U.S. third-quarter GDP, may drag on fourth-quarter growth
... The third-quarter's respectable expansion should set up the economy to achieve at least 2 percent growth in the second half of the year, around its long-run potential. In the wake of robust job growth in October and strong domestic demand, the Fed is expected to raise rates at its Dec. 15-16 policy meeting.
Let's be clear here:
- U.S. population growth has averaged about 0.8 percent per year since the dawn of the Age of Malaise, which I named the POR (Pelosi-Obama-Reid Economy) when it appeared in the late spring of 2008.
- In the 25 quarters since the U.S. officially emerged from recession in mid-2009, the economy's average annualized growth rate has been 2.2 percent.
- This means that per-capita GDP has only increased at an annual rate of 1.4 percent (2.2 minus 0.8) during the past six-plus years.
- If the economy had instead achieved its 61-year average growth of 3.4 percent — which included ten recessions) — the annual increase in per-capita GDP would have been 2.6 percent (3.4 minus 0.8) — almost double what we've seen (and even closer to double once one compounds the growth rates just identified).
So according to Mutikani and Simao, the Congressional Budget Office and the Obama administration both need to tear up their federal economic and budget projections, and start over using the economy's "long-run potential" growth rate of 2.0 percent — which, on a per-capita basis, is barely half of what we saw from 1947-2007.
If they were to do that, CBO would have to revise its assumptions "that real GDP will grow ... by 3.1 percent in 2016, and by 2.7 percent in 2017." The Obama administration's joke known as the President's Budget, which was released in February, projected that growth this year will be 3.1 percent (that's obviously not happening), 3.0 percent in 2016, and 2.8 percent in 2017. Changing those assumptions to 2.0 percent would make an already dire federal budget situation look virtually incurable.
The economy can do much better — just not under the current overtaxing, over-regulating, over-controlling, and crony-corrupted regime.
In 1987, as reported in the New York Times, projected economic growth of 2.5 percent was considered "hardly robust." A 2007 report from the State of New Jersey's Council of Economic Advisers (at Page 2) described reported growth of 2.2 percent in the fourth quarter of 2006 as "tepid." But the absolute best we can now over the long-term, as far as what the average person sees and feels, is about half as well we did for over 60 years.
Horse manure.
Shame on Lucia Mutikani and Paul Simao for their small part in lowering expectations, and shame on our "leaders" for trying to explain away their failures of the past seven by throwing up their hands and pretending we can't do any better.
Cross-posted at BizzyBlog.com.
