Our Dismal Recovery
Obama and his Treasury secretary have been out there touting the "recovery," and the MSM have been playing along, but no one's buying. Again, let's compare the big recession that greeted Reagan in his first year in office, compared to that which greeted Obama, and the their respective recoveries have played out:
Obama's been going around touting job creation. Geithner had the nerve to imply in a recent WSJ op-ed that the job creation has been above normal for a recovery. Let's look at the unemployment rate month-by-month for the Reagan recession vs the current one:
As you can see, Reagan's recession (probably better referred to as the Reagan/Volcker Recession) started at a much higher unemployment rate (near 7%) and remained above 10% for several months. Unemployment is painful, and such a high rate is certainly not a welcome development. But then look at where the rate was at the point in the recession where we are today (2 2/3 years in) - the unemployment rate had dropped down below 8%, while we are still mired at a 9.5% rate. The total employment picture tells a similar tale, but more dramatically:
Employment today remains far below it's pre-recession levels, while at a similar point in the Reagan recession employment levels were skyrocketing.
This is a rather dismal recovery. Granted, the economy is not a complete disaster, but disaster, while not yet at hand, is hardly off the table. Our economy's inability to re-create lost jobs over such a long period is not a scenario we have encountered in the Post-War period. Stagnation of this sort may just signal a reduced growth era - but at some point point failure to grow morphs into decay, and I haven't seen any particularly persuasive scenario that leads to growth.
Data behind the graphs are here.
Obama's been going around touting job creation. Geithner had the nerve to imply in a recent WSJ op-ed that the job creation has been above normal for a recovery. Let's look at the unemployment rate month-by-month for the Reagan recession vs the current one:
As you can see, Reagan's recession (probably better referred to as the Reagan/Volcker Recession) started at a much higher unemployment rate (near 7%) and remained above 10% for several months. Unemployment is painful, and such a high rate is certainly not a welcome development. But then look at where the rate was at the point in the recession where we are today (2 2/3 years in) - the unemployment rate had dropped down below 8%, while we are still mired at a 9.5% rate. The total employment picture tells a similar tale, but more dramatically:
Employment today remains far below it's pre-recession levels, while at a similar point in the Reagan recession employment levels were skyrocketing.
This is a rather dismal recovery. Granted, the economy is not a complete disaster, but disaster, while not yet at hand, is hardly off the table. Our economy's inability to re-create lost jobs over such a long period is not a scenario we have encountered in the Post-War period. Stagnation of this sort may just signal a reduced growth era - but at some point point failure to grow morphs into decay, and I haven't seen any particularly persuasive scenario that leads to growth.
Data behind the graphs are here.
posted by ziel | 8/07/2010 08:06:00 PM
4 Comments:
Very interesting plots.
Very interesting plots, but...
What makes you think that the two recoveries could be comparable under any scenario?
Adam, when bad things happen, it's good to be able to look to the past. The last recession we had comparable in scale to this one was in the early 80's. We can gain hope knowing that we uncovered from that rather nicely. However, looking at the actual numbers, we see that this recovery is not behaving at all like that recession's recovery. And so it kind of dashes our hopes, doesn't it, to find that we're not showing any of the robustness in economic growth now that characterized the recovery in '82 and '83.
That's bad. In 1981 we had just come off a decade of economic bust and we were due for a boom. Obama came into office after two decades of boom and we were due for a bust.
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