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Friday, May 5, 2017

Great Depression vs. Great Recession GDP Growth Rates - Updated As of the First Quarter of 2017

In March 2015, two illustrious economists, both Former Fed Chairman Ben Bernanke and Former Treasury Secretary Larry Summers have been duking it out on the blogosphere about secular stagnation.  In layman's terms, both are attempting to describe why the US Recovery from the Great Recession feel so sluggish.

Ten years into the start of the Great Recession and the economy is no where near take-off speed. Instead, we seem to be decelerating. The first quarter growth for 2017 was an anemic 0.7% annualized. To be fair, the economy does seem to get the "winter blues" in the first quarter of each year, sometimes dipping into negative territory.

At this point in the Great Depression, the US economy was roaring back into recovery at an 8.08% annual growth rate, something that economists today can only dream of. Despite five years of deeply negative economic growth (1930 to 1933 and 1938), the US economy managed to grow at an average growth rate of 1.31% per year. Our current average? Only 1.25% per annum, despite having a relatively shallow dips of -2.70% in 2008 and -0.20% in 2009.  Our economic growth rate never went past 2.70% (in 2013) this entire time. The economy has truly stagnated with no end in sight.