Cheat Sheet Q&A: What would happen if the country did have 3%+ growth again:

Cheat Sheet Q&A: What would happen if the country did have 3%+ growth again: 

Today's entry: Brian, I've been interested to hear your information about how long it's been since the economy grew normally. Since it's been so long what actual outcomes could we expect to see from it? 

Bottom Line: I'll first set the stage for those who might have missed the related stories on the US economic growth rate. Here are the high points: 

The average US growth rate is 3.2% annually 

The last year we had a full year of average economic growth was 2005 

That information alone demonstrates why the economy hasn't "felt good" to the average family in a very long time... 

So to address today's question. What would 3%+ sustained growth look like if we had it in today's economy? The best way that I know to illustrate the differences in economic growth rates is the following: 

1% growth: The economy is weak and at risk of recession (as any step backward from this growth rate would tip the scales into negative territory). The economy doesn't produce enough new jobs to keep pace with the demand based on population growth. As a result wages stagnant and can even fall based on the rising unemployment pool. 

2% growth: The economy is stable but is generally treading water. The economy grows enough jobs to keep pace with demand but not enough to make significant progress with those who're already unemployed. As a result there's generally wage stagnation to slight growth that's often based on specific industries.  

3%+ growth: The economy is strong, growing more than enough jobs to make progress with the real unemployment rate. The tightening labor market also drives wages higher at a pace that's generally consistent with the economic growth rate itself. 

So hopefully that paints a picture. Talking specifics, you'd see over 300,000 jobs added per month in that 3% growth economy and wages that would also rise by 3%+ year over year for like work. Fingers crossed that this is finally the year that we discover "normal" US economic growth once again. 

If you have a topic or question you'd like me to address email me:

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