Today we got the first estimate of the growth of the economy during the third quarter of the year. Annualized, it’s 2%, which is pretty anemic.
On the other hand, it is growth, which is a lot better than the decline and bottom of the previous three years. In fact, the GDP is now back to just 1% lower than it was before the recession.
Why, then, does it feel so bad?
- Employment growth lags GDP growth; employment is still near its bottom.
- People are saving more, and paying down debt. That’s good, but it slows down growth while it’s happening.
- In the past three years, the working-age population has risen.
- Had there not been a recession, three years of normal growth would have raised GDP to about 10% above where it is now. That’s the GDP level we need to return to full employment.
On the positive side, the FDIC did not have to close any banks this week. That trend has been looking better for the past six months.
