Economic recovery rockiest since Depression
The recession that ended three years ago this summer has been followed by the feeblest recovery since the Great Depression, according an extensive review of the country’s economic ups and down over the past eight decades.
Since World War II, 10 U.S. recessions have been followed by a recovery that lasted at least three years. An Associated Press analysis shows that by just about any measure, the one that began in June 2009 is the weakest.
The ugliness goes well beyond unemployment, which at 8.3 percent is the highest this long after the end of a recession.
Economic growth has never been weaker in a postwar recovery. Consumer spending has never been so slack. Only once has job growth been slower.
More than in any other post-World War II recovery, people who have jobs are hurting: Their paychecks have fallen behind inflation.
Many economists say the agonizing recovery from the Great Recession, which began in December 2007 during the George W. Bush administration and ended in June 2009, is the predictable consequence of a housing market collapse and a grave financial crisis.
Credit, the fuel that powers economies, evaporated after Lehman Brothers collapsed in September 2008. A 30 percent drop in housing prices erased trillions of dollars in home equity and brought construction to a near standstill.
So any recovery was destined to be a slog.
“A housing collapse is very different from a stock market bubble and crash,” said Nobel Prize-winning economist Peter Diamond of the Massachusetts Institute of Technology. “It affects so many people. It only corrects very slowly.”
The U.S. economy has other problems, too. Europe’s troubles have undermined consumer and business confidence on both sides of the Atlantic, and the deeply divided U.S. political system has delivered growth-chilling uncertainty.
The AP compared nine economic recoveries since the end of World War II that lasted at least three years. A 10th recovery that ran from 1945 to 1948 was not included because the statistics from that period aren’t comprehensive, although the available data show that hiring was robust. There were two short-lived recoveries — 24 months and 12 months — after the recessions of 1957-58 and 1980.
Here is a closer look at how the comeback from the Great Recession stacks up with the others:
America’s gross domestic product — the broadest measure of economic output — grew 6.8 percent from the April-June quarter of 2009 through the same quarter this year, the slowest in the first three years of a postwar recovery. GDP grew an average of 15.5 percent in the first three years of the eight other comebacks analyzed.
The engines that usually drive recoveries aren’t firing up this time.