Why do so many Americans feel dissatisfied about the economic state of their nation? None other than former Fed uberdove, Narayan Kocherlakota 'fiction peddles' one simple chart that makes it hard for any card-carrying Democrat to argue with…
As Bloomberg reports, the chart below shows the cumulative growth in per capita real GDP in the U.S. over the preceding ten years, for each year from 1957 to 2015. It does a great job of depicting the country's post-World War II macroeconomic experience.
Narayana sees 3 key points:
- Growth was unusually strong in the 1960s and early 1970s. In every year from 1966 through 1973, per-capita income was up between 30 percent and 40 percent from a decade earlier. Thus, it's not surprising that many Americans recall this as a great period for the nation’s economy.
- In every year from 1984 to 2007 — a period that economists call the Great Moderation, because of the way both growth and interest rates stabilized — per-person income was up between 20 percent and 30 percent from a decade earlier. That's ample reason for Americans to view this as a good period for the economy.
- Cumulative per-person growth from 2005 to 2015 was lower than in any prior decade in the sample. That certainly helps explain why many Americans are unhappy with the nation’s recent economic performance.
As he concludes: Americans are right to want better performance than they've seen in the past ten years.