Austerity before recovery in G-7 economies

All talk of austerity and fiscal consolidation masks the alarming fact that three-and-half years since the recession struck, the economic output of all G-7 economies, except Canada, remains below the pre-recession peak. In other words, but for Canada, none of the others, including Germany, have regained their GDP lost during the recession.

The graphic below captures the quarterly real GDP trajectories, including the latest of Q2 2011, of all the seven economies since the pre-recession peak.