Cleveland Fed researchers suggest moderate growth may persist

‘Economic Trends’ research highlights possibility of a slowdown in US trend rate of growth; economy shows modest version of previous recoveries

Research published by the Federal Reserve Bank of Cleveland on August 9 suggests the possibility that the current moderate growth in the US may represent a downward adjustment in the trend rate.

Authors Margaret Jacobson and Filippo Occhino compare the pattern of recovery from the most recent recession with previous recoveries. "Typically, in the initial stages of a recovery, productivity grows strongly, as output picks up while employment and hours lag behind," the researchers write.

The report says productivity and hours have followed this pattern, but at a lower growth rate than before. "This pattern suggests that the economy has completed its initial adjustment period and is currently in a period of normal expansion. If that is true, the current sub-par growth rates may be indicative of a trend slowdown," the authors say.

Click here to read the report.

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