Why is GDP Growth so Weak?

A preliminary reading of US GDP for Q1 2015 came out today at +0.2%, below the 1% expected by economists. The severe winter weather undoubtedly played an important role and the economy may experience a strong rebound in Q2 and Q3 as it did last year (2014 Q1: -2.1% Q2: +4.6%, Q3: +5%). But the recovery since 2009 remains weak compared to preceding ones. As noted in various posts on this site, US demographics are partly responsible.

As shown in the table, in the 23 quarters since the recession ended, this recovery has only seen 7 quarters of 3%+ growth, while the two previous recoveries, after the 1991 and 2001 recessions, saw 13 and 12 quarters of 3%+ growth.

GDPQuarters (1)

During the two previous recoveries, population growth averaged 1% per year but in the current recovery, it has averaged 0.7%. More important, the number of Americans aged 30 to 60 grew steadily from 1978 to 2005 but it has been flatlining at about 122 million people since 2005 and will continue to do so until 2020.

These two factors explain why this recovery has seen fewer strong quarters than those of the 1990s and 2000s.

Related posts:

It’s the Demography, Stupid

The Economy’s New Boss: Demographics

Is America Heading Towards Zero Population Growth?