Moving forward, there are reasons to believe that growth will continue to be slower than was originally hoped. Annual U.S. GDP growth exceeding 3.0 percent, as experienced in the mid- to late 1990s and mid-2000s, is not expected to be attainable over the coming decade. The length and nature of the recession have left lasting scars on the economy.
4 With the persistent high levels of long-term unemployment, a concern exists that individuals’ skills will deteriorate or the individuals will become permanently discouraged from job seeking. High unemployment likely inhibited the usual churn that helps create better matches between worker skills and employer needs, hurting economic efficiency. Furthermore, restrained investment during the recession could be hindering growth prospects. A reluctance to grow capital stocks, implement new technologies, or fund new enterprises during the downturn can prevent businesses from reaping productivity gains in the subsequent years. Combined, these impacts may have lowered the growth rate of potential GDP. Following a downturn, a period of above-average growth is often expected to ensue, as output returns to its potential level. Instead of a few booming periods followed by average sustainable growth, growth is more reasonably expected to remain continually below prerecession rates.
Looking forward to 2022, the U.S. Bureau of Labor Statistics (BLS, the Bureau) expects slower GDP growth to become the “new normal.”
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