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A Tale of Two American Economies

NEW YORK – While the United States recently reported 3.5% GDP growth in the third quarter, suggesting that the most severe recession since the Great Depression is over, the American economy is actually much weaker than official data suggest. But official measures of GDP may grossly overstate growth in the economy as they don't capture the fact that business sentiment among small firms is abysmal and their output is still falling sharply. Third quarter GDP - properly corrected for these factors - may have been 2% rather than 3.5%.

The story of the US is, indeed, one of two economies.  There is a smaller one that is slowly recovering and a larger one that is still in a deep and persistent downturn.