Via FAS – Slow Growth in the Current U.S. Economic Expansion – Mark P. Keightley, Specialist in Economics; Marc Labonte, Specialist in Macroeconomic Policy; Jeffrey M. Stupak, Analyst in Macroeconomic Policy. June 24, 2016.

“Between 2008 and 2015, economic growth has been, depending on the indicator, one-quarter to one-half the long-term average since World War II. Economic performance has been variable throughout the post-war period, but recent growth is markedly weaker than previous low growth periods, such as 1974 to 1995. Initially, slow growth was attributed to the financial crisis and its aftermath. But even after the recession ended and financial conditions normalized, growth has remained below average in the current economic expansion. The current expansion has already lasted longer than average, but growth has not picked up at any point during the expansion. By some indicators, growth began to slow during the 2001 to 2007 period, while other indicators suggest that the slowdown is more recent and abrupt. Although this report focuses on the U.S. economy, the same pattern has occurred across other advanced economies. Economists have offered a number of explanations at various points for the relatively slow recovery. These explanations are not necessarily mutually exclusive, and some economists combine elements from more than one in their diagnoses. Slow growth in the immediate aftermath of the crisis could be attributed to deleveraging (debt reduction) by firms and house holds and financial disruptions caused by the crisis, but those problems were of a temporary nature. There is historical evidence that recoveries are slower after financial crises. Permanent damage from the crisis, called hysteresis, would affect the subsequent recovery. For example, if long-term unemployment resulting from the crisis eroded workers’ skills, it could be more difficult for them to find a job when the labor market has recovered. This factor was of greater importance early in the recovery and of waning importance as the recovery continues because it would be expected to leave the level of GDP permanently lower, but should not affect the long-term growth rate…”

• See also this CRS INSIGHT – Economic Growth Slower Than Previous 10 Expansions, June 30, 2016 (IN10520) by Jeffrey M. Stupak.