The chart below shows the annual real rate of U.S. GDP growth going back to 1930. In the last 84 years, the U.S. economy has averaged an annual growth rate of 3.34%. For the chart, we have color coded each year based on whether or not annual GDP growth was above (gray) or below (red) 3.0%. Currently, the U.S. economy is in the midst of its eighth straight year in which annual growth has been (or will be) below 3%. This eight years also happens to coincide with the entire tenure of Ben Bernanke as the chairman of the Federal Reserve. Prior to the current eight-year stretch, the longest streak of sub-3% growth was the four years from 1930 through 1933.
While the blame for the current period of sub-par growth hardly rests on the shoulders of the current Fed chairman, one can imagine that he will do whatever he thinks is humanly possible to make sure that the streak ends before his tenure is up. For this reason, for better or for worse, we expect that the Fed will keep its current policies of accommodation intact until it is abundantly clear that economic growth has picked up.