What Recovery? The Great Recession Is Still With Us, New Study Finds

Tyler Durden's picture

Authored by Constantin Gurdgiev via True Economics blog,

Here is the most important chart I have seen in some months now. The chart shows the 'new normal' post-2007 crisis in terms of per capita real GDP for the U.S.

Source: http://rooseveltinstitute.org/wp-content/uploads/2017/07/Monetary-Policy-Report-070617-2.pdf

The key matters highlighted by this chart are:

  1. The Great Recession was unprecedented in terms of severity of its impact and duration of that impact for any period since 1947.
  2. The Great Recession is the only period in the U.S. modern history when the long term (trend) path of real GDP per capita shifted permanently below historical trend.
  3. The Great Recession is the only period in the U.S. modern history when the long term trend growth in GDP per capita substantially and permanently fell below historical trend.

As the result, as the Roosevelt Institute research note states, " output remains a full 15 percent below the pre-2007 trend line, a gap that is getting wider, not narrower, over time".

The dramatic nature of the current output trend (post-2007) departure from the past historical trend is highlighted by the fact that pre-crisis models for forecasting growth have produced massive misses compared to actual outrun and that over time, as new trend establishes more firmly in the data, the models are slowly catching up with the reality:

Source: ibid

Finally, confirming the thesis of secular stagnation (supply side), the research note presents evidence on structural decline in labor productivity growth, alongside the evidence that this decline is inconsistent with pre-2007 trends:

On the net, the effects of the Great Recession in terms of potential output, actual output growth trends, labor productivity and wages appear to be permanent in nature.

In other words, the New Normal of post-2007 'recovery' implies permanently lower output and income. 

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LawsofPhysics's picture

But we have record highs in equities, full employment, company earning and profits are all good!!!!!!

 

Better RAISE THOSE RATES AND SELL THAT BALANCE SHEET MR. YELLEN YOU CRIMINAL CUNT!!!!!!

 

"Full Faith and Credit"

Oracle of Kypseli's picture

Karma strikes when you least expected.

Doña K's picture

I have been bracing for impact for quite a while.

JRobby's picture

QE, ZIRP, NIRP, massive debt issuance for 17 years ALL for the elite. All of it.

People are drowning.

Newsboy's picture

Wile-E-Coyote moment soon...

merizobeach's picture

Wow, colorful charts...  So the CBO is revealed as being a unicorn!  Standing on the pinnacle of the historical line and shitting a rainbow.. (at us).

ssgredux's picture

I feel gay just looking at it.  Gimme a goddamn unicorn Heir Yellen!

Doom Porn Star's picture

According to those charts we not only already went over the cliff, and have begun the descent; but, the rate of the descent is increasing compared to the cliff ( historical trendline ) that we went over..

Okienomics's picture

Yeah, no.  Each chart depicts gains, albiet a slower rate of gain. 

Iskiab's picture

Post Great Recession is proof that trickle down and monetarist policies are a load of shit. Pumping trillions of dollars of money into the economy has done nothing for your average American, to the point where trillions of added dollars don't show up in inflation.

It has created two economies; the high end where asset prices like the stock market, luxury goods, high end real estate, etc have exploded and there's been massive inflation, and then the average person's economy where wages, core inflation, etc.. has been stagnant. There has been some spillover like REITS driving up average real estate prices, but the economy is mostly divided. The effect is a massive misallocation of resources into unproductive hands and erosion of the consumer market driving the economy.

Now to right itself you'll need trillions of assets to evaporate to bring things back in line, but most DOW companies are politically protected so we're stuck in a state of government interference with the market. Until some big companies are allowed to fail this will continue indefinitely.

Xscream's picture

Far as i can see. There all the 9.50 a hour part jobs one could ever want to choose from. Of course you need to work  three of them to make enough to pay the bills and eat much. There has been no recovery of bread winner jobs except in the areas dominated by MIC companies and government jobs, they still do well overtime even. The DC metro, MD and VA counties near ground zero are booming just fine. Houses still very exspensive, watch out when rates rise if they ever do ...................... they must do so some SAY JANET SAYS SO 

Ironplates's picture

things work until they dont, and the process for keeping the allocation of resources toward the wealthy is still working. 

SDShack's picture

What you have outlined is the perfect plan by the Corporatocracy to design and implement Neo-Feudalism. That has been the plan all along and it is working perfectly for the Elites who are destroying the middle class and usurping all their assets by turning them into Serfs. The only thing you left out is the Security State to make sure any resistance to their plan is tamped down to prevent revolts. Global Sheeple are being herded into the New Feudal World Order.

Jim in MN's picture

Corruption and Tyranny are the natural enemies of markets.

Anyone who tries to sell Deep State economics at this late date is simply evil.

You want growth, jobs and wages?  KILL THE DEEP STATE

LawsofPhysics's picture

ah yes, the old "growth" meme...

 

...still believe that eCONomic growth can continue forever and ever in a biosphere with finite resources and numerous biochemical cycles that MUST continue turning and require huge energy input to do so?

Good luck with that!

Jim in MN's picture

I do think that a population of 10-12 billion can achieve a decent standard of living.  Market based resource allocation and democratic systems give us all the best chance, however good that happens to be.

"Forever and ever?"  This is Zero Hedge, didn't you read the tagline?

Next.....

Kidbuck's picture

Free markets and democracy are incompatible. The FSA will always out vote the productive citizens.

HillaryOdor's picture

No idea why people are downvoting you.  Freedom and democracy are diametrical opposites.   Freedom means absence of coercion.  Democracy means coercion sanctioned by a majority.  They can never be compatible.  It's just that we are living in a post-modern dystopia where words have no meaning and people just redefine freedom to mean whatever the majority wants, e.g. a right to healthcare, workers' rights, women's rights, gay rights, all the beautiful fruits of cultural Marxism, and all of course privileges, not rights.  People even want internet access to be a right now.  They say you can't live without it anymore.  Actually you can.  Food grows out of the ground, not over the internet.

LawsofPhysics's picture

The you better define the growth IN WHAT, exactly?

Growth in financial "products" of mass destruction and plastic crap?  No thanks.

History is very clear on the issue of societies growing much faster than technology.  Facts are indeed a bitch for the average ape. (HINT: don't be average)

 

Bubenthauser's picture

What jobs? Lawyers and financiers everyone? Nobody wants to work anymore. They all go to the same schools/uni's to do the same shit. No wonder then they have to be forced into bartending et similia.

 

CJgipper's picture

Lawyers????? You just hit on the jobs in the MOST dire straights.  Look it up.  More lawyers serving coffee than lawyering these days.  No one can fight each other or teh big companies because the big corps have everythign rigged in their favor and they have all the income and wealth.  Going against them is a death wish these days.

duo's picture

If inflation was counted correctly, or even like it was when Bill Clinton was in office, GDP would be 30% LOWER now than in 2007.

BullyBearish's picture

the global money printers are leading us toward WAR...instead, governments can declare WAR on them, abolish them, confiscate their assets and start fulfilling their mandates to produce and protect national currencies...

GARDENZ's picture

Amazing how high stocks can go when measured in terms of an ever exploding money supply.  Thank you Fed.

Full employment looks good as long as you don't count all the unwilling unemployed.

A market economy adjusts until earnings and profits are all good. i.e. all the weaker participants are dead or assimilated.

Guitarilla's picture

Yeah. 95 million out of the work force is not full employment.

wholy1's picture

DUH.  Welcome to the GreatER Depression, since 2007-09 cuz . . . it's an [on-going, probably accelerating] P-R-O-C-E-S-S like just about everything else "IN ths world". And the time-immemorial REAL asset/wealth consolidation/xfer covertly rolls on.

Txpl9421's picture

Do you think that maybe its because all of those Baby Boomers are retiring?

It will be years before the Millenials will be able to earn what their parents were making.

I am Jobe's picture

Law of Diminishing Returns. It will be a decades not a decade or two. Also don't forget Automation. 

how_this_stuff_works's picture

My dad used to tell me he wanted me to have a "better" life than he did. And he actually had a pretty good life, achieving much despite growing up through the Great Depression (of '29). Looking back, I have some pretty great memories.

However, it seems the more our society has "achieved," the more we want. Few people seem contented any more, let alone "happy," even when they live quite comfortably with enough food to eat and roofs over their heads.

lester1's picture

Main Street has been in an economic depression since 2008.

The Federal Reserve lies

People are desperate and looking for change.

That's why Trump won the election!

I am Jobe's picture

Trum is not going to change a thing other than rattle and tweet. 

corporatewhore's picture

Is it just my reading but the H bots are out in force making zerohedge a flashpoint?

Maybe the Don won't change a thing and maybe he will.   But the alternative was a given "no change--just enrichment of self etc."

how_this_stuff_works's picture

"Is it just my reading but the H bots are out in force making zerohedge a flashpoint?"

I'm not sure about the "H bots" making zerohedge a flashpoint, but I could see where provoking shoot-from-the-lip responses diminishes the credibility of ZH readership.

Kprime's picture

yes and we are still desperate

Doom Porn Star's picture

He's gonna be our Sledge, Sledge; Sledgehammer!

 

onthedeschutes's picture

Heaven help us when the millenials finally figure out just how fucked they really are.  Compliments of the Federal Reserve, of course.

earleflorida's picture

its always been a ... me, me, me world

esp., every generation since the 'Latchkey`kids'! in america

i want it --- NOW!!!

Kprime's picture

every generation since latchkey cave kids

small axe's picture

the oligarchs baked this pie and you can't have any

have some gruel instead. It's good for you

Akdov Telmig's picture

I've noticed a major short term top for the summer in the US OIL at 50 USD I'm shorting the October contract each time it comes close to 50 USD has been working beautifully so far. 

FlKeysFisherman's picture

Shadowstats.com provides the real data.

south40_dreams's picture

No, the depression that started after the tech crash of 2000 has never been resolved. It's been nothing but wars, lies, extreme borrowing, extreme printing, smoke and mirrors ever since

markitect's picture

Yep - they shifted the bubble from tech stocks to real estate loans then when that blew up they started printing money like mad to back stop the collapse.  Nobody knows how this plays out.

Cash Is King's picture

Don't forget handouts! First to the commoners to prime the pump and their corporate lackeys and the war machine.

Batman11's picture

After de-leveraging since 2008, the US is in a slightly worse position than it was before the Great Depression.

Everything is still shit.

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.52.41.png 

Saving the banks and leaving all the debt in place wasn’t a solution.

The FEDs actions since 2008 have barely touched the underlying problem.

The UK has followed a similar path:

https://cdn.opendemocracy.net/neweconomics/wp-content/uploads/sites/5/2017/04/Screen-Shot-2017-04-21-at-13.53.09.png

Einstein “We cannot solve our problems with the same thinking we used when we created them.”

Today’s economics doesn’t look at private debt in the economy.

They didn’t see the problem coming; they still don’t know what caused 2008 and have attributed it to a “black swan”.

They haven’t fixed the debt problem, because they don’t know it is a debt problem.

This is what Einstein was talking about.

Batman11's picture

There were people who did see 2008 coming.

Twelve people were officially recognised by Bezemer in 2009 as having seen 2008 coming, announcing it publicly beforehand and having good reasoning behind their predictions.

They all saw the problem as being excessive debt with debt being used to inflate asset prices (US housing and mortgage backed securities).

They all think you can’t use debt to solve a debt problem. They all think that as we have used debt to solve a debt problem a bigger crash is coming in the future. 

This is what Einstein was talking about; we made a huge mistake in not looking to the people who understood the problem.

Steve Keen saw 2008 coming in 2005:

https://www.youtube.com/watch?v=qrz76_j9MRs

(First 50 secs. is just introduction)


Step 1 - Understand the problem

Step 2 - Find a solution

All problems have something in common, step 1 and 2.

You need to do step 1, before step 2.

They haven't done step 1 yet, morons.

We are going nowhere fast with the mainstream clowns.


corporatewhore's picture

So, who among those who saw 2008 coming, are seeing something now?

sheikurbootie's picture

I saw 2008 coming in 2005.  I see the exact same situation now.