On brief reflection, I realized that I was falling into the cherry-picking trap. I note that the whole graph only represents five years. Is this really representative of the big picture? Now I get the sense that among conventional economists, DeLong is relatively smart and honest, so I'd be disappointed to find otherwise, but as we already know from the "no warming since 1998" crowd, a five year picture really isn't enough for an outsider without much context to form a sensible impression of a multidecadal process. It was surprisingly tedious to find a more extensive version of the plot, but a modest amount of diligence yielded this:
Note the logarithmic scale, which isn't really necessary on the shorter time period. Essentially we are looking at a remarkably steady growth rate, wherein the "size" of the US economy is about twenty times what it was in the mid-60s.
Now I am privileged to actually remember the mid-60s (the early 70s is another story...) and I can pretty much state that while well-being in North-America has not increased twenty-fold,
Now we also see from the chart why the economists are so sure that this "recession" will end. The pattern is amazingly steady, with the tiniest of kinks here and there. This one is a bigger than average kink, but now that the free-fall has been stanched (thanks almost entirely to the brilliance and good luck of the Obama administration and the good will it has overseas, I would point out) it's hard to see the huge momentum of the overall pattern breaking.
But of course, it will break. The pattern you see, steady though it may appear, is quite literally unsustainable. So it won't be sustained. What the graph shows us is why so many people are blind to the fact that a growth rate like this, in the grand scheme of things, is abnormal. They think we "neo-malthusians" WANT to stop the gravy train because we hate fun and pleasure, or crave power, or enjoy scary stories or something.
No. We want to stop the gravy train because the bridge is out ahead.
This being the case, I can only hope we never entirely recover from the current glitch. There are some (good) "bad" signs that we won't. The topsy turvy fake money trick that drove the ramp in the Bush years was perhaps sort of a last desperate play of the growth economy. Resources are running out. People are finally understanding that time is worth more than money.
One interesting question raised by the graph is how it managed to sustain such a steady pattern for so long. Was it intrinsic to capitalism under abundant resources, or was it forced by policy? Is the growth imperative built in to the system or is it grafted on by policies aimed at full employment? Either way, the behaviors it has motivated of late (for instance, far too many people own and maintain several houses due to the speculative bubble in real estate) seem simply crazy from a whole systems perspective and an individual perspective alike.
It's worth understanding why this bumpy line has the shape it does, rather than simply presuming it will go on forever. Note that it's on a semi-log scale, which means we really are looking at an exponential. Exponentials commonly reach abrupt ends in nature. (Update: I would have done better to say: positive exponentials eventually break in nature, sometimes abruptly.) Is there any reason to expect we are exempt?
Or is it simply a matter of when the pattern will break, rather than whether it will?
For what it's worth, I think the amazingly sustained growth is a consequence of the growth imperative in the policy sector, which in turn is a consequence of a deep-rooted conceptual error shared by left, right and center. This policy is only feasible in the presence of great abundance, an abundance which appears to be ending.
In short, what we need is security, comfort, purpose, and community, not "jobs". The substitute worked for historical reasons that are no longer valid. Consequently, we need to stop working for the substitute goal, just as Easter Islanders needed to stop building statues, even though the statue-building culture had served them well in their recent past. Alas, they could no longer conceive of any alternative.
Update: Despite the appearance of legitimacy, the second graph appears actually to be, simply, wrong. It doesn't match any dataset I can find. I can't figure out what it's going on about.
Official inflation-adjusted GDP via US national Bureau of Economic Analysis in chained 2005 gigadollars:
2,830.9 2,896.9 3,072.4 3,206.7 3,392.3
3,610.1 3,845.3 3,942.5 4,133.4 4,261.8
4,269.9 4,413.3 4,647.7 4,917.0 4,889.9
4,879.5 5,141.3 5,377.7 5,677.6 5,855.0
5,839.0 5,987.2 5,870.9 6,136.2 6,577.1
6,849.3 7,086.5 7,313.3 7,613.9 7,885.9
8,033.9 8,015.1 8,287.1 8,523.4 8,870.7
9,093.7 9,433.9 9,854.3 10,283.5 10,779.8
11,226.0 11,347.2 11,553.0 11,840.7 12,263.8
12,638.4 12,976.2 13,254.1 13,312.2 12,987.4
Total growth factor 1960 - 2009 = 4.7 .