Just playing with more graphs of GDP. No new data have been released since the last graph, but I added income data for fun. Details below:
- The figures above show real output in the US over the post-war business cycles (WWII for those unfamiliar with the jargon). Each period was chosen to contain the expansions immediately before and after each recession, and the segments were aligned horizontally so that you can compare patterns.
- The black lines plot US real GDP andGDI (Gross Domestic Income) over time for the indicated horizon: i.e. the bottom lines show 1947q1 through 1953q2. Each periodcontains one recession, and they’re aligned horizontally so that period “0” is the quarter the recession ended. The periods overlap, so the second from thebottom line shares observations on 1950 q 1 to 1953q2 with the line below it.Basic economic accounting implies that the two series, GDP and GDI, should be nearly equal, as every dollar spent in the economy is a dollar that someone else earns in income. The two series can be different in reality because they are estimated using different surveys and data sets.
- The picture uses a log scale along the vertical axis. This means that periods of constant growth rate look like straight lines (i.e. a growth rate of 3% per year looks like a straight line with a slope of 0.03). Bear in mind that the scale was chosen so that most lines would be about 45 degrees, so it’s easy to see differences in slope but probably difficult to read off the slope of any segment itself.
- A few things jump out. There hasn’t been a “V-shaped” recession in the US in about 30 years. The dominant pattern lately has been for growth to resume at about the rate it was before the recession. Compare that to any of the earlier recessions, where there’s a period of faster growth once the recession ends.
- Also, and even more important over the long run (but less viscerally noticable at the moment), GDP growth has fallen over the last decade.You can see that, even ignoring the so-called “Great Recession,” the slope of GDP over in the top period is flatter than the previous one. This accumulates, so we’ll be much worse off in 10 years and 20 years than we would be otherwise unless that trend changes.
- The data are available through the St. Louis Fed (GDP, GDI) and the R code used for the plots is on GitHub.