Characterizing the Unusual Path of U.S. Output During and After the Great Recession

In this article, we examine the extent to which U.S. per capita gross domestic product (GDP) growth has been uncharacteristically slow in the recovery from the 2007--09 recession and investigate whether this tepid growth might be a short- or longer-term phenomenon. We first examine several conventional univariate time series representations of per capita GDP and use these to assess the most recent recession and recovery in relation to its previous behavior over the U.S. postwar period. We then present a decomposition of per capita GDP into three components---each of which tends to fluctuate at different frequencies from the others---and find that the substantial decline in the labor force participation rate during and after the Great Recession played a key role in the unusually large fall and slow recovery of per capita GDP. Since the labor force participation rate moves slowly over time, one might expect per capita GDP to continue to recover at a considerably slower pace than what has been observed after other postwar recessions.