The best news of 2014, if it can be sustained, may have been the return of fast-paced economic growth. The U.S. economy in the third quarter grew at 5 percent, the Commerce Department announced last week — a rate not seen in more than a decade.
And growth in the second quarter wasn’t too shabby, either, at 4.6 percent.
Economic growth doesn’t cure all social problems, of course, but without it those problems — poverty, unemployment, stagnant middle-class wages, among other things — become nearly intractable.
For that matter, government deficits and debt are far easier to get a handle on with surging growth (and therefore expanding tax revenue).
Economic growth is vital to fostering a sense of popular optimism in the future, too. And not without reason. In the 20th century, for example, “real U.S. GDP growth outpaced population growth and inflation by about sevenfold,” Stephen Moore and Julian Simon recounted in “It’s Getting Better All the Time,” their retrospective on the previous century’s impressive advances. Staggering improvements in public health, diet, longevity, working conditions, home amenities, transportation and communications — just to name a few measures — were possible because of the overall gains in wealth.
By contrast, lack of per-capita growth — which defines most of human history — breeds a sense of futility as well as destructive political battles among interest groups over a static economic pie.
Unfortunately, growth has been alarmingly slack since the global financial crisis of 2008, which saw two years when the economy contracted. And not a single year since has boasted growth over 3 percent, with 2013 clocking in at a paltry 1.9 percent.
So was 2014 the breakout year, with more good years to come? It’s clearly about time. Unfortunately, the rest of the world, including much of Europe and Japan, seems to be stagnating, while a few major nations, such as Russia, appear actually to be shrinking.
In other words, the U.S. economy may have to maintain momentum against difficult international headwinds. But a 5 percent third quarter at least offers reason to hope.
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