US is not closing the gap – and neither is the UK


Michael Roberts Blog

The US and UK economies may be growing in real terms (after inflation) at about 2.0-2.5% right now, but both are still experiencing the weakest post-war recovery in GDP growth ever.   Look at how the US economy has done since the Great Recession began in 2008.  The subsequent ‘recovery’ is still way weaker than trend growth was before the global slump (red line).  And it is still below potential growth at full capacity, as measured by the US Congressional Budget Office (blue line).  The gap between previous trend growth (red line) and future potential growth (blue line) is bad enough.  But even the gap between potential growth (blue line) and actual growth (black line) will not be bridged until 2016 and there is no chance of returning to where pre-crisis trend growth (red line) would have taken GDP for the foreseeable future.

Closing the gap in output potential

The relative weakness in this recovery is…

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