What Accounts for Slow Growth of the Economy After the Recession?

Subtitle: 
Congressional Budget Office Report

The U.S. economy has grown slowly since the deep reces­sion in 2008 and 2009, which was triggered by a sharp drop in house prices and a subsequent financial crisis. During the three years following the recession (that is, the third quarter of 2009 through the second quarter of 2012), the economy’s output grew at less than half the rate exhibited, on average, during other recoveries in the United States since the end of World War II.1 All told, between the end of the recession and the second quarter of 2012, the cumulative rate of growth of real (inflation­adjusted) gross domestic product (GDP) was nearly 9 percentage points below the average for previous recov­eries. Researchers continue to grapple with understanding the roles that steep declines in house prices and financial crises play in slowing the growth of output.