How far have we fallen in this recession and how far do we need to grow to regain what we have lost? The reality is that the recovery will not feel like a recovery until we start closing the gap between potential and actual GDP - growth by itself is not enough because so much has been lost. These two graphs struck me as indications of the size of the loss.
The graph of the left shows the decline in retail sales. The one of the right shows net worth. The story it shows is connected to the negative wealth effect that is weighing down consumer spending. Basically, consumption has and will continue to be low because households are significantly poorer than they were prior to the crisis.
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