boilingfrogspost / Thursday, 12. April 2012
Where to Blame the Crack-up in Jobs Growth?
Last week, Edward Lazear wrote an op-ed in the Wall Street Journal with the uplifting title “The Worst Economic Recovery in History.” Lazear noted that many people have referred to our latest recession as the worst recession since the Great Depression. He then proceeded to make the case that, while we may technically be in an economic recovery, our current recovery is not only the worst since World War II, it is even worse than the recovery in the Great Depression.
That’s a tough one to beat. According to Federal Reserve data, it took 88 months (about 7 years) for industrial production in the United States to muddle through the Great Depression and get back to its previous peak level in August 1929. We’ve only had 51 months since the December 2007 peak in industrial production before our latest recession, and we still aren’t back to that December 2007 peak yet. This is bad, to be sure, but on this basis it’s hard to say our latest recovery is “even worse” than the slow one after the Great Depression, because we just haven’t had the time yet.
But Lazear was making his case in terms of growth rates during the recovery. On that basis, in the 32 months since the latest economic “trough,” industrial production growth has averaged 0.4% per month. This is about one-third the average growth rate in the 32 months following the March 1933 trough at the bottom of the Great Recession.
With the slow growth in recent years, we are seriously lagging the recovery performance after 11 recessions since World War II. Here we are, 51 months (over four years) after the beginning of the latest recession, and industrial production is only at 96% of where it was back at the November 2007 economic peak. Business cycle experts ‘officially’ deem that our latest recession ended in June 2009, and things have been on an uptrend since then. But the last two years have been abnormally sluggish ones, in light of how bad the recession was. For example, 51 months after the peak of ten previous recessions, we’ve never had industrial production below where it was when those 10 previous recessions got underway.
