The Recession May Be Over -- But the 'Recovery' Is Very Weak
With the recession officially over, how does it stack up to previous ones? And how has the recovery been going? The National Bureau of Economic Research, a private organization, has declared that, according to their measures the recession ended in June 2009. Since then, we supposedly have seen over a year of "recovery."
How bad the recession has been depends on what you look at. The Carter recession during the early 1980s produced a higher unemployment rate, with unemployment rising to a peak of 10.8 percent compared with the peak this time of 10.1 percent. The recent recession also did not come close to reaching the 14 percent annual inflation rate that we reached during the end of 1980.
On the other hand, the recent drop in GDP was larger. The three worst quarters of this recession saw drops in GDP of 6.8, 4.9, and 4 percent, exceeding the 6.5, 4.9, and 3.2 percent drops during the early 1980s.
The most striking difference between these two recessions is how the economy recovered after they ended.
In the 14 months since the recent recession is said to have ended in June 2009, the unemployment rate has actually risen slightly from 9.5 to 9.6 percent. By contrast, the recession in the early 1980s ended in November 1982 and its unemployment rate plummeted by 3 percentage points over the same period, falling from 10.8 to 7.8 percent.
The same striking difference shows up in how GDP has grown during the two recoveries. Gross Domestic Product has grown by 3 percent during four quarters that we have seen for the current recession, with the last quarter slowing to an annual growth rate of just 1.6 percent. Over the four quarters after the 1980s recession, GDP grew at 7.75, well more than 2.5 times faster what we have seen over the last year. Given this much slower growth rate, it isn't surprising that unemployment has shown so much less improvement.
The current slow recovery provides a real contrast in Reagan’s approach of providing incentives and Obama’s policies of spreading the wealth. Whether one looks at either GDP or unemployment, President Obama’s recovery has been an unusually weak.
John R. Lott, Jr. is a FoxNews.com contributor. He is an economist and author of the just released revised edition of More Guns, Less Crime (University of Chicago Press, 2010).
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