America’s Economic Malaise in One Chart
By Michael Hendrix,
U.S. Chamber of Commerce Foundation
America’s economic growth continues to underwhelm expectations. To illustrate this dismal reality, the noted economist Larry Summers created a chart showing the gradual decline in economic growth forecasts by the Congressional Budget Office for each of the seven years affected by the Great Recession. Every year brings a lowering of expectations, and every time our actual GDP fails to meet even this low bar.
Summers’ chart should show us how awful we are at predicting the future. End of story. Our actual ability to anticipate and respond to the ups and downs of the economy is far less than we may think.
But more than that, we should recognize that each year in which America’s potential output is lowered to meet actual output is another year in which we further lose our ability to grow the economy.
The question that Summers ponders is the degree to which officials and policymakers are out of ammunition to fire up the economy before stagnation permanently wipes out a share of America’s output capacity. He hints at short-term solutions, but it’s hard not to see this chart as a call for long-term structural reforms as well.
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