The St. Louis Fed looks at three economic indicators that may come into focus in the upcoming policy debate.
1) Real GDP per capita
Output per capita
This is a New Normal chart. It shows output about 15% below the precrisis trend. The pace since 2010 has been 1.6% compared to 2.5% from 1955-2007.
2) Real personal consumption expenditures per capita
This is a similar chart that shows consumption now growing at a more moderate pace than the pre-crisis period. The conclusion from charts 1 & 2 is that we’re stuck in a painful deleveraging cycle.
3) Real gross private domestic investment per capita
real gross private domestic investment per capita
This is the lynchpin to escaping the rut. Companies just don’t feel like investing in the United States and that caps consumption, productivity and output. It’s 27% below the pre-crisis trend.
Central bank policy is virtually tapped out but how politicians choose to reverse these trends (if at all) is the critical question. Or maybe they’ll simply concede that it’s now a low-growth environment.