Great Graphic: How the US Recovery Stacks Up


Until now the recovery from the Great Financial Crisis was the weakest from the post-WWII last four contractions.  However, as Kruger points out assuming that the Atlanta Fed's GDP tracker is accurate, this dour  assessment will not longer hold.   It will surpass the recovery from the end of the tech bubble at the start of the century.  


One camp argues that as financial crisis (balance sheet crisis), it takes longer to recover than from a traditional end of a business cycle.  However, the from that perspective, the US economy has recovered faster than anticipated.     When the history of this period is written, the early and aggressive action by the Federal Reserve (with the Treasury Department) was a big reason why a Great Depression was avoided.  

The other camp argues that the lackluster recovery is due to secular stagnation.  Insufficient aggregate demand has become the normal condition. Serial bubbles have hidden it. However, when looking at that chart, it is difficult to say the US economy is stagnating.  The US economy has never been bigger.  It may be growing slowly, and some of the headwinds, like the less supportive demographics, will be with us for some time, but stagnation is not a fair description of  the heavy black line on the chart. Part of the problem is productivity growth has slowed, and economists, let alone policymakers, do not fully understand the causes.  


Great Graphic: How the US Recovery Stacks Up Great Graphic:  How the US Recovery Stacks Up Reviewed by Marc Chandler on July 27, 2016 Rating: 5
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