Doug Short: Earlier today we learned that the Advance Estimate for Q3 2014 real GDP came in at 3.5 percent (rounded from 3.549 percent), down from 4.6 percent in Q2. Real GDP per capita was lower at 2.9 percent (rounded from 2.88 percent).
Here is a chart of real GDP per capita growth since 1960. For this analysis I’ve chained in today’s dollar for the inflation adjustment. The per-capita calculation is based on quarterly aggregates of mid-month population estimates by the Bureau of Economic Analysis, which date from 1959 (hence my 1960 starting date for this chart, even though quarterly GDP has is available since 1947). The population data is available in the FRED series POPTHM. The logarithmic vertical axis ensures that the highlighted contractions have the same relative scale.
I’ve drawn an exponential regression through the data using the Excel GROWTH function to give us a sense of the historical trend. The regression illustrates the fact that the trend since the Great Recession has a visibly lower slope than long-term trend. In fact, the current GDP per-capita is 9.4% below the pre-recession trend but fractionally higher than the 10.0% below trend in Q1 of this year.
The real per-capita series gives us a better understanding of the depth and duration of GDP contractions. As we can see, since our 1960 starting point, the recession that began in December 2007 is associated with a deeper trough than previous contractions, which perhaps justifies its nickname as the Great Recession.
Quarterly GDP Compounded Annual Rate of Change
The standard measure of GDP in the US is expressed as the compounded annual rate of change from one quarter to the next. The current real GDP is 3.5 percent (rounded from 3.549 percent). But with a per-capita adjustment, the data series is currently at 2.9 percent (rounded from 2.88 percent). Both a 10-year moving average and the slope of a linear regression through the data show that the US economic growth has been slowing for decades.
How do the two compare, GDP and GDP per capita? Here is an overlay of the two in the 21st century.
To expand on the illustration above: Since 1960 mean (average) GDP is 3.1 percent. Mean GDP per capita is 2.0 percent.
Percent off Highs
Here is another revealing snapshot of real GDP per capita, specifically illustrating the percent off the most recent peak across time, with recessions highlighted.