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August 2, 2013

MEGAN MCARDLE: Don’t Grade The Economy On A Curve:

GDP grew at an annualized pace of 1.7 percent in the second quarter, triggering a rash of positive headlines . . .

. . . wait, positive headlines? For growth under 2 percent? If that were our annual raise, we’d be grousing in the break room. Why are headline writers happy to see such an anemic rate?

Well, because it beat expecations. But talk about the soft bigotry of low expectations! I mean, there is good news, in that the sequester is apparently resolutely refusing to completely trash the economy, the way many had feared it might. But growth is still 1.7 percent. And growth for the first quarter was revised downward to 1.1 percent, from a prior estimate of 1.8 percent. Overall, there’s not too much to be happy about here.

Perhaps, as Neil Irwin suggests, we’ve all started grading on the curve. Carmen Reinhart and Kenneth Rogoff tell us that growth is usually very slow after financial crises; it takes a lot of time to rebuild damaged balance sheets from households to the government. And, after all, many other countries are doing worse. At least we’re growing.

But there’s a problem with grading on a curve: It’s no good being the top person in the class if no one in the class can do basic math.

We’re not ready for a post-growth America.

But we’ve been fundamentally transformed. Time to do some transforming of our own.