Something I’ve been wondering for a while is whether the real growth rates seen in the FDR administration would be allowed today. Its a strange question considering the number of people who are convinced that the economy simply didn’t grow in the FDR years until the war started – they seem to forget the crash and the bulk of the decline that followed occurring during the Hoover administration.
Here’s real GDP per capita for 1929 – 1932 (Hoover’s term) and 1933 – 1940 (FDR’s first 8 years, before the war).
(Incidentally, the data on real GDP per capita comes from the BEA’s NIPA Table 7.1, line 9, so its as official as it could possibly get.)
In table form with annual percentage growth… here are the growth rates:
Notice the annualized growth rate… 5.37%.
This is almost 2 percentage points a year faster than the annualized growth rate under JFK/LBJ, the administration under whom growth was fastest in the Post-WW2 years. It was more than twice as fast as under Clinton or Reagan, the second and third fastest growing administrations, and almost 4 times as fast as the annualized growth rate seen so far under GW.
So the question arises… would the Fed, today, allow that sort of growth rate without clamping down hard for fear of inflation? Does the fact that the economy had dropped 27.5% from 1929 to 1932 make the fast growth that followed, well, OK?