By Jared Bernstein, Guest Op-ed, New York Times,  Dec. 5/6, 2012

With the budget-and-tax showdown dominating headlines, most Americans probably missed an even more ominous story: according to a report by the Congressional Budget Office, America’s underlying growth rate — that is, the best the economy could do, under optimal conditions, without driving up inflation — has slowed from just under 4 percent a year in 2000 to just under 2 percent today.

Why does this matter? For one thing, the combination of a lower underlying growth rate, which you could think of as the economy’s speed limit, and a less equitable distribution of that growth was a reason middle-income households did so badly and poverty went up in the 2000s. During the 1990s, in contrast, stronger demand for goods and services led to much faster job growth and the last real gains experienced by middle- and lower-income households. [....]