The long term decline in the United States’ GDP

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This article begins by focusing on the low GDP numbers that have plagued the Obama administration, but I think this fact is far more significant:

Under previous presidents, real GDP sometimes grew massively during the first quarter. In 1950, under Truman, for example, GDP grew at an annual rate of 16.9 percent in the first quarter. In 1955, under Eisenhower, it grew at a rate of 11.9 percent. Under Johnson, in the first quarters of both 1965 and 1966, it grew at a rate of 10.2 percent. Under Nixon, it grew at 11.1 percent in the first quarter of 1971, and 10.2 percent in the first quarter of 1973, it grew at 10.2 percent. Under Ford, in the first quarter of 1976, it grew at 9.3 percent. Under Reagan, in the first quarter of 1984, real GDP grew at a rate of 8.2 percent.

But since 1984—more than three decades ago–there has been no first quarter, in any year, under any president, when real GDP grew even as fast as 5.0 percent. The closest it came was in the first quarter of 2006, when George W. Bush was president, and it hit 4.9 percent.

Note the trend downward, from 16.9% to 11.9% to 10.2% to 11.1% to 10.2% to 9.3% to 8.2% to less than 5%. The only significant other dominant social change during this seven decade period has been the steady rise of the federal government and its crushing regulatory control over all aspects of American life and business, regardless of which party has been in power. We should therefore not be surprised that there has chronic decline in the U.S.’s economic might during this time period. You can’t create new wealth if everything you do is increasingly supervised by a centralized bureaucracy that knows nothing about your business — but thinks it does.

And obviously, the solution is bigger government. Yup, that’s the answer. Just ask the Soviet Union, or Democratic Presidential candidate Bernie Sanders!


  • Garry

    The low labor participation rate is one of the main drivers of this, which itself is caused by a combination of demographics and bad policy.

    On the policy side, there’s the welfare state, of course, as well as no substantial changes in social security since 1986, while people live longer and the birthrate is lower than it was in decades past. What we end up with is a smaller chunk of people working in the private sector, with proportionately more people working for the government, not working at all, or retired. Higher taxes and more regulation may cause a death spiral of the private sector, which of course is the only thing holding up the government sector and the retired.

    What’s really scary is that of the world’s developed nations, the US is probably in the best shape in all of this. Japan’s demographics are already causing a loss in population, with a drastic increase in elderly (retired) population. Most of western Europe is just behind them. Among developing nations, China is just behind Japan, and Russia is right there as well. More and more I refer to the US as “the tallest midget.”

    The world will look very different in 50 to 100 years. If Europe is to still be relevant economically, it will probably be majority Muslim. I worry about what damage China will do as it declines. Japan will be much weaker in the coming decades. If India can reduce its corruption and get its higher education system together, it may very well be the next world power.

    If we can’t turn our own ship around, the US will continue to decline. I hope we get some constructive leadership soon.

  • pzatchok

    ” If Europe is to still be relevant economically, it will probably be majority Muslim. ”

    If it goes majority Muslim it stand a HUGE chance of going Sharia law. Which will drag it down to the pits economically. Think of Egypt but without all the rich people and the caring government.
    A whole lot of poor people riding broken down trains to broken down destinations. Working in broken down shops and factories. All for sub standard wages.

  • Given that all natural systems expand or contract until they reach environmental equilibrium, and given that those processes tend follow natural log curves, I thought that might help explain the figures you cite. In the 1950’s the US was by far the dominant power; the world has changed some since. I plotted the data points, and the smoothed curve resembles an exponential curve more than a natural log curve. I didn’t actually find the line equation. Absent outside interference, you’d expect the decline in Q1 GDP to be much more gradual than has been the case.

    All that is just a long-winded way of saying government regulation may well be a factor. Some grad student is probably all over this, and if they’re not, they should be.

  • Heh. Right now I feel I am McCoy and you are Spock. And as McCoy would say, loudly, “Humans are not equations and data points on a damn log curve! We have emotions and ideas and creative thoughts! You treat us badly, squelch our freedom, and you will prevent us from achieving our best! For us to prosper you have to give each person the chance to follow their dreams and reach their full potential, as they see fit!

    “Put that in your exponential curves (and government regulation) and shove it!”


  • “Right now I feel I am McCoy and you are Spock.”

    My point wasn’t to irritate, but to illustrate ( I didn’t miss the smilicon). Progressives are flummoxed by facts, and as some obscure historical figure said “They know so much that isn’t so.”

  • Nor was I irritated, merely amused. I could hear the dialogue between Spock and McCoy in my head, and couldn’t resist playing McCoy.

  • Garry

    You’re probably right.

    It’s ironic that economies of developed nations seem to be doomed by low birth rates, and those of developing nations seem to suffer from high birth rates (it’s often said that there are no jobs for the young in Egypt, for example).

    It’s probably simplistic to think that the two problems can cancel each other; there are too many cultural barriers to overcome.

  • Cotour

    If the First world would find a different way to “help” the third world the numbers would tend to solve themselves.

  • PeterF

    I’m a doctor not an escalator!

  • To Peter F,:

    “Friday’s Child” Didn’t even have to look it up.

  • David M. Cook

    It was the great Ronald Reagan who said “The trouble with our Liberal friends is not that they’re ignorant; it’s just that they know so much that isn’t so.” Amen, Mr President!

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