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

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. 


LawsofPhysics Mon, 08/07/2017 - 09:54 Permalink

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"

Iskiab JRobby Mon, 08/07/2017 - 10:35 Permalink

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.

In reply to by JRobby

Xscream Iskiab Mon, 08/07/2017 - 12:41 Permalink

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 

In reply to by Iskiab

SDShack Iskiab Mon, 08/07/2017 - 13:04 Permalink

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.

In reply to by Iskiab

HillaryOdor Kidbuck Mon, 08/07/2017 - 11:18 Permalink

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.

In reply to by Kidbuck

CJgipper Bubenthauser Mon, 08/07/2017 - 11:23 Permalink

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.

In reply to by Bubenthauser

wholy1 Mon, 08/07/2017 - 09:56 Permalink

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 Mon, 08/07/2017 - 09:59 Permalink

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.

how_this_stuff_works I am Jobe Mon, 08/07/2017 - 11:04 Permalink

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.

In reply to by I am Jobe

lester1 Mon, 08/07/2017 - 10:02 Permalink

Main Street has been in an economic depression since 2008.The Federal Reserve liesPeople are desperate and looking for change.That's why Trump won the election!

Akdov Telmig Mon, 08/07/2017 - 10:09 Permalink

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. 

south40_dreams Mon, 08/07/2017 - 10:34 Permalink

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

Batman11 Mon, 08/07/2017 - 10:41 Permalink

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.pngEinstein “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 Batman11 Mon, 08/07/2017 - 10:43 Permalink

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 problemStep 2 - Find a solutionAll 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.

In reply to by Batman11