Is 3% Economic Growth Even Possible Anymore?

There's nothing about 3% economic growth that is particularly impressive. Historically, it's right around average actually. But looking at recent economic data, most recently today's anemic jobs report with only 69,000 added jobs in the month of May, I am seriously wondering if it'll ever be achievable again. For most of the last four years, the specific nature of the foreclosure crisis served as an anchor, with a rising tide of foreclosures that consistently kept the economy below the water line. But home prices finally seem to showing signs of recovery and the likelihood is that the foreclosure situation (knock on wood) hit bottom and is on the mend. Of course the new dark cloud overhead is the pending armageddon in the eurozone which most economists persuasively suggest is acting as a wet blanket on investment in the United States. Even so, I'm inclined to believe there's more to it than that....

My contention is that the latest economic false dawn is the product of our new era of expensive energy which has combined with the bearish investment market to create a toxic push and pull that is not only suppressing current economic growth, but threatens to do the same with future would-be economic booms. Consider how in February, the American economy had produced more than 200,000 jobs for three consecutive months. Again, this is nothing particularly robust from a historical standpoint but compared to where we've been it seemed like the economy was finally about to get its legs. That expectation was all it took for speculators to go wild artificially inflating oil prices, and in doing so, managed to kneecap the very recovery they were depending upon. With the era of cheap oil over and most investments yielding little to no real-world return, oil is always gonna look like a safe bet to the masters of the universe whenever the global economy appears buoyant. But when the outcome of this oil market speculation drives gas prices through the roof and kills consumer confidence, is it not inevitable that the economy is always gonna be operating below its capabilities?

Of course, the "drill, baby, drill" crowd would tell us that this problem could be resolved with an all-cylinders-firing energy policy in which we extract every last drop of oil that we can possibly get from the ground, but they fail to understand that the push and pull of the energy economy renders this scenario tactically impossible. As I discussed before, the era of putting a shovel into the sand and pulling it out covered in oil is over. America still has a tremendous reserve of energy on and off our shoreline but almost all of it is "expensive oil" that requires some variation of deep water drilling or squeezing oil trapped inside rocks. It is costly to extract oil by these means and it requires $100 per barrel oil to turn a profit from the production of this oil. Whenever oil prices soar, the energy companies swoop in to start pulling tar sands from out of the ground and planning oil rigs in two-mile deep ocean water. But once the price of oil starts dropping, nobody wants to lose money by continuing to squeeze oil out of rocks. Thus, energy supply falls meaning that when demand rises, oil prices rise again, the speculator vultures circle the wagons, and the vicious cycle is repeated.

With all these things in mind, is measurable economic growth a thing of the past? Even the phony financial industry-fueled economic growth that has been the source of our faux economic growth over most of the last 25 years? I struggle to see how, particularly with so many more participants in the global economy demanding a larger share of finite energy supply. It seems as though this cycle will play out repeatedly until something breaks.