"...A key reason to be concerned about continuing below-average GDP growth is Okun's Law, which originally held that to get the unemployment rate to decline by 1 percentage point, we'd need a year of GDP growth 3% above average. Okun based that estimate on data for the U.S. economy prior to 1960, but it has held up pretty well in the half century since then, with 2.5% above-average GDP growth a better summary of the requirement based on the full sample of data now available. Using data from 1949:Q1 to 2011:Q4, here's a quarterly regression of the year-over year change in the unemployment rate on the year-over-year percent change in real GDP (Newey-West standard errors with 8 lags in parentheses):
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Vertical axis: change in unemployment rate between last month of the quarter and value for same month in the preceding year. Horizontal axis: 100 times the change in the natural logarithm between U.S. real GDP in a given quarter and the value for the same quarter of the previous year. Line plots regression equation above. at http://www.econbrowser.com/archives/2012/01/us_gdp_not_a_re.html
