By Peter Ferrara
(FORBES) — From 1947 to 2007, the U.S. economy averaged real growth of 3.2% a year. At that rate, our GDP would double every 22 years. It is that sustained, long term economic growth that made the United States into the world’s dominant superpower.
Last year, U.S. real economic growth was a paltry 1.7%. The current quarter will probably not be much better. Historically, the deeper the recession, the stronger the recovery. That is because the U.S. economy has always rebounded back to the long term economic growth trend. But not this time. Because the recovery has been so weak and so far below historical standards, at current trends we will be 20% below the long term trend line for the U.S. economy permanently, meaning a 20% lower standard of living than if we caught back up to that long term trend line through faster than trend growth in the interim.
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Yet, if we go back into recession next year, our standard of living will fall farther and farther behind the U.S. economy’s long term trend. That is fundamental change, but not that we can believe in, or that gives us hope.