Is Moderate Growth the New Normal?

By Jacobson, Margaret; Occhino, Filippo | Economic Trends, August 2012 | Go to article overview

Is Moderate Growth the New Normal?


Jacobson, Margaret, Occhino, Filippo, Economic Trends


08.09.12

by Margaret Jacobson and Filippo Occhino

Since the end of the recession, the economy has expanded at a slow pace. Recently revised data show that real GDP grew 2.5 percent in the first year of recovery, slowed to a 1.9 percent pace in the second year, and settled to a 2.2 percent growth rate in the third. The economy missed out on the period of rapid recovery that typically follows business cycle troughs, and it has been growing quite steadily at rates lower than in past expansions. We examine the factors behind these subpar growth rates and present some evidence that moderate growth may be the norm going forward.

[GRAPHIC OMITTED]

The current slow pace of expansion is the result of several factors pushing the economy in opposite directions. Factors that are moving the economy forward include high investment growth and stronger household balance sheets. Business fixed investment grew 10.3 percent in the last year, accelerating in the last several quarters. High rates of investment growth were fueled by solid profits and favorable bond finance conditions. Households made substantial progress deleveraging. Households' ratio of debt to assets declined from a 21.3 percent peak during the recession to the current 17.6 percent, as households reduced their liabilities, while their assets recovered. With stronger balance sheets, households were able to reduce their saving rate from levels above 5 percent to 4 percent, more in line with pre-recession levels, and this lifted one constraint on their spending.

[GRAPHIC OMITTED]

For all of the improvement in business spending and household balance sheets, other factors continue to weigh down the expansion. The labor market remains weak, with slow employment growth and high unemployment, and this constrains household income and spending. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Is Moderate Growth the New Normal?
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.