According to the Bureau of Economic Analysis (BEA), real GDP is now slightly above the pre-recession peak. Real GDP (in 2005 dollars) was at $13,382.6 billion in Q4, just 0.14% above the $13,363.5 billion in Q4 2007.

However industrial production is still 5.8% below the pre-recession peak, and it will probably be some time before industrial production returns to pre-recession levels.

Payroll employment is still 5.6% below the pre-recession peak. And even with slightly above trend GDP growth in 2011, payroll employment growth will probably only recover slowly. Payroll employment is still 7.7 million below the pre-recession peak, and if the the U.S. adds 2.5 million payroll jobs per year over the next 3 years (my current forecast is 2.4 million private sector jobs this year), it would take 3+ years to return to the pre-recession peak. And that doesn't include population growth!

This graph shows real personal income less transfer payments as a percent of the previous peak.This has been slow to recover - and is still 4.3% below the previous peak.

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Real GDP Still Below Pre-Recession Levels

Real GDP is 0.8% below the pre-recession peak, so real GDP would have to grow at a 3.1% annualized pace in Q4 for the economy to be back at the pre-recession peak.

That is unlikely since growth in personal consumption expenditures (PCE) will probably slow in Q4, and the contribution from the change in private inventories will likely be much smaller or negative in Q4.

Probably the earliest the economy will be back to pre-recession levels for GDP would be in Q1 2011 and that requires a 1.6% annualized growth rate over the next two quarters. It might even take until Q2 2011 (my current forecast).


Real personal income less transfer payments is still 5.5% below the pre-recession peak. Much of the growth in PCE over the last year has come from transfer payments - this includes people taking Social Security early, extended unemployment benefits, and other assistance programs - and it will be some time before this indicator returns to pre-recession levels.


Industrial production has been one of the stronger performing sectors because of inventory restocking and some growth in exports. However industrial production is still 7.5% below the pre-recession peak, and it appears export growth has slowed, and the inventory cycle is almost over.


Payroll employment is still 5.6% below the pre-recession peak. And with below trend GDP growth, payroll employment growth will likely remain sluggish.

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Industrial Production and Capacity Utilization

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Industrial Production

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Industrial Production and Capacity Utilization

This graph shows Capacity Utilization. This series is up 9.6% from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 74.7% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.

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World Industrial Production

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Industrial Production for July

This graph shows Capacity Utilization. This series is up 9.8% from the record low set in June 2009 (the series starts in 1967).

Capacity utilization at 74.8% is still far below normal - and well below the the pre-recession levels of 81.2% in November 2007.

This is the highest level for industrial production since Oct 2008, but production is still 7.3% below the pre-recession levels at the end of 2007.

The increase in July was above the consensus of a 0.5% increase in Industrial Production, and an increase to 74.5% for Capacity Utilization.

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Capacity Utilitization Feb 2010

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Industrial Production Falls 2%

U.S. industrial production dropped by a bigger-than-expected 2% in December, Federal Reserve data showed Friday, capping a dismal year for manufacturing as the recession took hold.

Economists polled by Reuters had expected a 1% decline in December after a revised 1.3% drop in November, initially reported as a 0.6% dip.

For the fourth quarter as a whole, total industrial production fell at an 11.5% annual rate.

Compared with December 2007, industrial production was down 7.8%, the biggest drop since September 1975.

read the CNN story