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The Worst Economic Recovery In US History

From the opinion page of the Wall Street Journal:

The Worst Economic Recovery in History

April 2, 2012

How many times have we heard that this was the worst recession since the Great Depression? That may be true—although the double-dip recession of the early 1980s was about comparable. Less publicized is that our current recovery pales in comparison with most other recoveries, including the one following the Great Depression.

The Great Depression started with major economic contractions in 1930, ’31, ’32 and ’33. In the three following years, the economy rebounded strongly with growth rates of 11%, 9% and 13%, respectively.

The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators. Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground

During the postwar period up to the current recession (1947-2007), the average annual growth rate for the U.S. was 3.4%. The last three decades have experienced somewhat slower growth than the earlier periods, but even in the period 1977-2007, the average growth rate was 3%. According to the National Bureau of Economic Research, the recovery began in the second half of 2009. Since that time, the economy has grown at 2.4%, below our long-term trend by either measure. At this point, the economy is 12% smaller than it would have been had we stayed on trend growth since 2007.

Worse, the gap is growing over time. Today, the economy is four percentage points further from the trend line than it was the first quarter of 2009 when this administration’s nearly $900 billion fiscal stimulus efforts began. If forecasts of around 2% growth turn out to be accurate, we will add to that gap this year.

Contrast this weak growth with the recovery that followed the other large recession of recent decades. In the early 1980s, the economy experienced a double-dip recession, with contractions in both 1980 and ’82. But growth rates in the subsequent two years averaged almost 6%. The high growth that persisted throughout the 1980s brought the economy quickly back to the trend line. Unlike the current period, from 1983 on, the economy was in rapid catch-up mode and eventually regained all that had been lost during the early ’80s

Well, President Reagan had a slightly different approach to the economy than Mr. Obama does.

Are there other factors that may have contributed to the slow recovery that we are experiencing? It would be difficult to argue that government polices over the past three years have enhanced confidence in the U.S. business environment. Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue an aggressive trade policy that will open markets to U.S. exports, and the enormous increase in government spending all are growth impediments. Policies have focused on short-run changes and gimmicks—recall cash for clunkers and first-time home buyer credits—rather than on creating conditions that are favorable to investment that raise productivity and wages.

There are some positive developments. The labor market is improving, albeit slowly. Profits remain high and the stock market has enjoyed some recent success. We can hope that these indicate better times and higher growth ahead. But unless we move to a set of economic policies that are aimed at growing the economy rather than at promoting social agendas, this may be the first "recovery" in history that fails to see us return to long-term average growth.

Mr. Lazear, chairman of the President’s Council of Economic Advisers from 2006-2009, is a professor at Stanford University’s Graduate School of Business and a Hoover Institution fellow.

Mr. Lazear does not seem to understand that there is no going back. Mr. Obama wanted to break the evil business cycle and he has.

This is the new normal.

This article was posted by Steve on Tuesday, April 3rd, 2012. Comments are currently closed.

4 Responses to “The Worst Economic Recovery In US History”

  1. Rusty Shackleford says:

    And yet Obama was out there yesterday bitching (again) that it’s capitalism that’s the root of all the problems.


    And, he may actually believe it. You know, the way very young children believe in the tooth fairy and Santa Claus. You cannot cure him of this derangement. It’s as much a part of his DNA as his black/brown/gray hair. http://www.thegatewaypundit.com/2011/01/barack-obama-his-magical-mystery-mood-hair/

    There’s a word of Yiddish origin that says it all: Schlock. http://en.wikipedia.org/wiki/Schlock

    Cheap, shoddy or inferior. Usually having to do with some form of presentation or production. It fits him to a T though.

    Here’s my uptake and thanks, Comic Book Guy :http://i56.photobucket.com/albums/g182/airbusteacher/Comic_Book_Guy_Worst.jpg

  2. AcornsRNutz says:

    So the duty to state the obvious now falls to educated men. I thin kwe are long past pointing this stuff out. They know damn well what they are doing, anyone who has any lingering doubts about that at this point is missing something.

  3. Anonymoose says:

    Obama and Biden just decided after the stimulus was spent to declare it a “summer of recovery” and hope it somehow would work out. Well, it hasn’t. I guess I’m glad I went into this thing with no house or savings, I hate to have been one of the people who lost it all. Even Roosevelt, who’s position in history I think needs to be re-evaluated, could point to definite things he’d done from the WPA to the CCC. He may have just been paying those men with even more borrowed money but at least things were being built. The infrastructure of the country is getting worse all the time, and the stimulus money might as well have been tossed down a well.

    • Rusty Shackleford says:

      Yup, the only thing that’s “shovel-ready” has been the BS that emanates from Obama’s mouth.

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