American Long Run Growth, 1800-1973

Throughout the 19th and the first three quarters of twentieth century the measured pace of economic growth continued to accelerate. The measured growth rate of output per worker rose from perhaps 0.5 percent per year from 1800 to 1870 to perhaps 1.6 percent per year from 1870 to 1929, on the eve of the Great Depression as is displayed in Figure above. Growth slowed slightly over the Great Depression and World War II decades--a measured growth rate of 1.4 percent per year from 1929 to 1950. However then it accelerated: growth rate of output per worker between 1950 and 1973 in the United States was 2.1 percent per year.

Furthermore it is likely that true output per worker growth since 1890 has been even faster. Several economists believe that official estimates overstate inflation and understate real economic growth by 1.0 percent per year in large part since national income accountants have a very hard time valuing the boost to standards of living and productivity generated by the invention of new services and goods and new types of services and goods. So rather than 1.5 percent per year perhaps we must be thinking of 2.0 to 2.5 percent per year for the rate of output per worker growth since 1870.