Creating the illusion of economic growth is easy if you can print money. It’s a prank you can play on an entire country. Cut the value of the currency in half and the economy’s size will appear to double. If it doesn’t, you’re in recession (whether you know it or not).
Cavemen probably understood this concept better than America’s best economic minds.
The only way to accurately measure changes in a nation’s economy is to do so relative to the world. According to the World Bank, the U.S. represented 31.8% of the world’s economic activity in 2001. By the end of 2011, that share had dropped to 21.6%, meaning America’s slice of the world economy is 32% smaller than it was a decade ago, and getting smaller every day. Note that America’s housing bubble did nothing to boost the U.S. on the global stage.
As horrific as these results are, they’re better than Japan’s, whose “lost decade” proved only to be prologue for its “lost-er decade.” Japan’s share of the world economy fell more than 35% from 2001 to 2011 (literally worse than Zimbabwe) and has now shriveled 54% from its peak. But Japan’s real collapse did not coincide with the bursting of its stock and real estate bubbles in 1990 and 1991 respectively. The decline actually began in 1995 when policymakers allowed government debt to exceed 90% of GDP (a milestone the U.S. quietly passed in 2010).
For more on this, see Mark McHugh's full post at "Across the Street".