This chart from Dave Altig of the Atlanta Fed is disturbing …
… and here’s why:
The bottom line of this chart is that there has been a pretty reliable relationship between sustained bouts of sub-2 percent growth and U.S. recessions (indicated by the gray shaded areas). In fact, over the entire post-World War II era, periods in which year-over-year real GDP growth has been below 2 percent have been almost always associated with downturns in the economy.
FT Alphaville are a gloomy bunch, but we’re not quite this gloomy (and neither is Altig, as he goes on to explain in the post).
The last two US employment reports were horrific, but it’s too early to completely write off the “transitory” crowd just yet. For now it seems far more likely the US will continue to have middling growth than another outright recession. But given the depths of the last recession and the increasingly long and winding road back toward trend growth, that’s terrible enough as it is.
Related links:
Is the June employment report a game changer – Macroblog
An awful June employment report – FT Alphaville
