In the life of almost all civilizations, a time comes where, as Yeats put it, “things fall apart.” The internal principles and assumptions that used to seem to work begin to break down. If the engines of growth have not ground to a halt, they certainly could use some fresh oil: stagnation replaces new opportunities. Everything that used to work suddenly doesn’t. What would have been an easy projection of power settles into a stalemate.
The United States has long been used to a steady pace of growth. A vibrant economy created more opportunities for Americans of all walks of life; the rising tide of growth really did lift all boats. This economic growth gave hope both to the nation as a whole and to distinct individuals. According to the U.S. Bureau of Economic Analysis, real U.S. gross domestic product (GDP) grew at an average annual rate of about 3.5% between January 1947 and January 2001. This rate of growth allowed for a doubling of the economy every 17-20 years.
Recent history tells a very different story, however. According to the BEA, between January 2001 and January 2012 the economy grew at an average annual rate of just 1.6%, less than half the average annual growth rate of the second half of the twentieth century. Nor can we entirely blame this stagnation on President Obama or even the Great Recession. During President George W. Bush’s presidency, from January 2001 to January 2009, annual GDP growth averaged 1.4%. Even during the period of growth between 2001 and 2007, annual GDP growth was just 2.7%. The supposed boom times in the past decade have lagged behind the average growth of the past; only about one year of the Bush presidency saw GDP growth greater than the average of the past. The Great Recession has only underlined the lost economic ground: as of April 2012, real GDP had only increased by about 2% since the economic peak of mid-2007. The U.S. economy has barely grown at all since 2007; that’s almost five years of average economic growth well under 1%.
Job growth numbers have also lagged. The net number of Americans added to private payrolls during George W. Bush’s administration is around a million. Granted, the economic crisis depressed this payroll number. But even by early 2008, at the peak of private employment during the Bush years, not even six million more jobs had been added to the private economy since January 2001. During Clinton’s two terms, over 20 million jobs were added to the economy. During Reagan’s administration, over 16 million were added. Even Jimmy Carter — malaise and all — saw jobs increase by well over eight million during his single term in office. Since January 2001, barely a million private jobs have been added to the economy. So Jimmy Carter in four years saw at least eight times the number of jobs added to the economy over the past eleven.
Something has gone awry in the U.S. economy over the past decade. The Cold War provides a troubling parallel here. By the late 1970s and early 1980s, Soviet growth began to slow considerably. By how much it slowed remains a point of contention (the notorious secrecy of Kremlin bureaucrats makes exact economic numbers hard to pin down), but official C.I.A. numbers estimated that average annual economic growth for the Soviet Union was about 1.9% between 1975 and 1980 and 1.8% between 1980 and 1985. These estimates would give the Soviet Union a faster average growth rate between 1975 and 1985 than the United States has seen in the past decade. After the collapse of the Soviet Union, many charged the C.I.A. with overestimating Soviet growth, particularly in the 1970s and 1980s. An alternative measure, established by economist G.I. Khanin, finds that the U.S.S.R. grew at an annual rate of 1% between 1975 and 1980 and at an annual rate of 0.6% between 1980 and 1985. This statistic puts U.S. growth in a slightly better light, but one can only take so much solace from the fact that the United States has still had almost five years of average annual growth at or below the most pessimistic estimates of Soviet growth rates in the early 1980s. Even by the standards of a Soviet five-year plan, the last five years of the American economy’s growth have been disappointing.