Real GDP per Capita at March 2005 Levels

First, what are we looking at...

• Blue line: real GDP per capita (in 2005 dollars)
• Red line: same 1951 starting point in real GDP terms, growing at the 2.15% annualized rate seen from 1951 through 2001 (hence the two lines intersect in June 2001)
• Yellow line: the difference between the two

Highlights:

• Real GDP per capita is currently at March 2005 (6+ years ago) levels
• We are currently "below trend" (if you believe in trend) by $7000 per person (assuming all 300+ million people share the growth equally)
• Real GDP per capita growth actually turned negative in Q1 2011 (flipped positive in Q2)
• Despite the end the recession, the gap between real GDP per capita and trend is growing

Bulls would say "if you believe at all in mean reversion, then the U.S. economy is bound to bounce back". Bears would say "this time truly is different and the recession didn't wipe out excesses (i.e. debt, imbalances between classes, etc...), thus we still have a way to go".

Source: Population / Real GDP

If the Fed is Missing This Big With Their 2011 Projections...

Source: Federal Reserve

Real GDP per Capita at September 2005 Level

Even after the "recovery", real GDP per capita is still 3% below the level seen December 2007 or roughly the level of real GDP per capita in Q3 2005.

Real GDP per Capita (Blue) - Percent from Peak (Red)


Source: BEA

Real GDP per Capita Recovery... a Ways to Go

St. Louis Fed President James Bullard (via Calculated Risk) relays:

As of the first quarter of 2010, real GDP stands just shy of the 2008 second quarter level, so that growth of about 1.25 percent would be sufficient to allow real GDP to surpass the previous peak. At that point, the U.S. economy would be fully "recovered" from the very sharp downturn of late 2008 and early 2009.

James Bullard believes real GDP should recover this 1.25% by Q3 '10. Unfortunately, real GDP misses a major factor for the individual... the individual. Looking at real GDP on a per capita basis we see real GDP still 2.9% below pre-peak levels. To put this figure in perspective, this is the most real GDP has been below the previous peak (excluding the most recent period) since December 1982.



If the economy were to grow at its 20 year 2.5% real GDP per capita average, we're looking at Q2 '2011 to be "recovered".

Source: BEA