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Posts Tagged ‘Weak GDP Growth’

Obama Presidency 2009-2012: Weakest Economic Recovery On Record

In 2012 Elections, Economy, Obama Administration on October 19, 2012 at 7:34 pm

When deciding who to vote for President, the footnoted piece provides a sense of perspective about the exceptionally weak economic recovery of the Obama presidency.   This recovery is just one-third as large as the “Reagan” recovery from the 1980-2 recession.  The recession ended more than three years ago, but people feel it has not ended because the recovery is so tepid.  The Wall Street Journal said:

It’s important to understand how unusual this kind of weak recovery is. Deep recessions like the one from December 2007 to June 2009 are typically followed by stronger recoveries, as there is more lost ground to make up.

The most recent comparable recession occurred in 1981-1982. Yet as the nearby chart shows, the Reagan expansion exploded with a 9.3% quarter and kept up a robust pace for years. By the 12th quarter of expansion, growth popped up to 6.4.%. At this stage of the Reagan expansion, overall GDP was 18.5% higher versus 6.7% for the Obama recovery, according to Congress’s Joint Economic Committee.

Even comparing this recovery with the average since the end of World War II, the Obama growth rate is well below the norm of 15.2%. The U.S. is running about $1.5 trillion of economic output behind where it should be.

This may sound like an abstraction, but it is the difference between a robust job market and lost opportunity for millions of Americans. It is the difference between a small federal budget deficit and more than $1 trillion for four straight years. It is the difference between a rising or falling poverty rate. [1]

[1] http://online.wsj.com/article/SB10000872396390443477104577553211912280818.html

Job fair picture from Wikipedia Commons.

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Statistics Show 2009-12 The Weakest Economic Recovery Ever

In Economy, Obama Administration, Regulation, Unemployment on April 11, 2012 at 1:16 am

The worst economic recovery ever? 

Yes, this ‘recovery’ is worse than those following the Great Depression and the near depression of the 1980, 1981-2 double dip recessions.  Deep recessions are usually followed by broad-based booms.  Consumers and corporations have delayed needs that are typically fulfilled through accelerated purchases.  Twenty Twelve does not have a feel even remotely like robust 1984.  Few would refer to today as “Morning in America.” 

An excellent free piece (not behind the paywall) at the Wall Street Journal comes from Edward P. Lazear. [1]  Highlights follow:

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.

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.

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.

[1] http://online.wsj.com/article/SB10001424052702303816504577311470997904292.html

Pictures from Wikipedia Commons.