Photographer: Luke Sharrett/Bloomberg

Don't Sweat America's Upcoming Microscopic GDP Growth

Normal growth for the U.S. economy is just a lot lower than it used to be.

Brace yourself for a tiny number on Thursday, when the Bureau of Economic Analysis reports a fresh figure on gross domestic product growth in the U.S. The median estimate of economists surveyed by Bloomberg is for an annual growth rate of just 0.6 percent for the first three months of 2016. A number that low was long considered strong evidence of an impending recession. Anything below 1 percent growth was "stall speed," an airplane metaphor for flying too slowly for the air passing over the wings to provide lift.

This time around, don't sweat the small number.

A new research note by Michael Feroli, chief U.S. economist at JPMorgan Chase & Co., predicts annualized growth of only 0.3 percent, below the consensus. But he says a recession is unlikely because a sub-1 percent number isn't as bad as it used to be, now that the economy's normal growth rate has slowed.

A sub-1 percent quarter was "a fairly reliable signal of impending recession risk" from 1947 to 2007, Feroli wrote, back when the sustainable growth rate of the economy was around 3 percent. Now, though, slower population growth and other factors have brought the sustainable growth rate down to more like 1.5 percent, according to JPMorgan estimates. Two percentage points below that would be negative 0.5 percent. In other words, the theory goes, the economy could actually shrink a bit for one quarter without stalling out and falling into a prolonged downturn.

"Put another way," Feroli wrote, "with slower trend growth we are more likely to see sub-1 percent or sub-0 percent quarters, but ... such occurrences shouldn't necessarily be seen as harbingers of crisis."

See? Happiness is all a matter of lowering expectations.

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