The views expressed in this column are solely those of the author and do not reflect the views of SVB Financial Group, or Silicon Valley Bank, or any of its affiliates.
There are three* phases to the economic cycle: growth, recession, and recovery.
Growth is when an economy is operating at a higher level than ever before. Recession occurs when growth stumbles to something lower. And recovery is the period of increasing activity that begins at the bottom of the cycle until a new high is reached - after that, you are back in the growth phase.
Today, most of the developed world remains in recovery, but two of the five largest developed economies have recovered and are now in the growth phase: the U.S. and Germany.
In other words, only the U.S. and German economies are operating at all-time highs.
Further, as can be seen in the graph, the U.S. economy is steaming upward compared to the rest. Why doesn't it feel this way?
The reason lies in the realm of relativity: Our pace of economic growth - at 2 percent or so - is much lower than the 3+ percent level we have experienced over recent decades.
Economists would say we are operating below "potential" GDP growth. On one hand, defining an economy's potential is a difficult prospect at best. On the other, it is likely economists know a lot about "limited potential."
*Most textbooks will tell you there are four phases, but not only do their naming conventions conflict, but the differences in growth and expansion are at best ill-defined.
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