Welcome to the Recovery

Q3 GDP grew at a 2 percent annual rate, which would be okay performance for a full employment economy but is totally insufficient to mobilize the huge number of idle workers today. Here’s the shape of the recession and “recovery” in both real and nominal terms:

As you can see, we’re still below the peak level of real output attained in Q4 of 2007. But in the intervening years, some new technologies have been invented, some firms have improved their business processes, and the size of the population has grown. We should be able to produce considerably more at the end of 2010 than we were producing at the end of 2007. That we’re failing to do so represents a massive failure of the American elite.