After sizzling early last year following the post-Katrina slowdown in late 2005, the economy’s growth rate decelerated to an average of 2.3 percent during the middle two quarters of 2006 before rebounding strongly in the October-December period, when the annualized growth rate jumped to 3.5 percent. After all the ups and downs played out, the end result was that the economy grew by 3.4 percent in 2006 after advancing 3.1 percent in 2005. Thus, after rising 3.7 percent and 3.4 percent in 2003 and 2004, respectively, 2006 represented the fourth consecutive year during which economic growth exceeded 3 percent.
In 2001, despite the fact that the economy experienced a recession between March and November, total U.S. output that year still managed to crawl forward at a 0.2 percent pace. During 2002, which was noteworthy for a “job-loss” recovery, economic growth expanded at a 1.9 percent rate.
Data for the first six years of the Bush presidency, show that the economy has grown by 16.7 percent, averaging 2.6 percent a year. During the five years since the mild recession ended in the fourth quarter of 2001, annual growth has averaged 3.1 percent. By way of comparison, economic growth averaged 3.6 percent throughout the eight years of the Clinton presidency, during which the economy never dipped into recession. Of course, no fair-minded person could possibly deny that the recession that greeted the Bush administration less than two months in office had its roots in the bursting of the stock-market and technology bubbles, which characterized at least the last two years of the Clinton expansion.
Also worth recalling is how the economy evolved during the Reagan presidency. The 1981-82 recession, the deepest postwar economic downturn, was precipitated, of course, by the necessity of the Federal Reserve to respond brutally to two years of double-digit inflation (13.3 percent in 1979 and 12.5 percent in 1980). Unemployment peaked at nearly 11 percent late in 1982. Nevertheless, during Mr. Reagan’s eight-year presidency annual economic growth still averaged 3.5 percent. During the last six years of his term, annual economic growth averaged a stunning 4.7 percent. During 1983, 1984 and 1985, the economy expanded by 7.7 percent, 5.6 percent and 4.2 percent. After taking a breather during 1986, when the economy grew by 2.8 percent, growth accelerated to 4.5 percent during 1987 and 3.7 percent during Mr. Reagan’s valedictory year.
America is now in its 25th year following the last steep recession. Only two brief, relatively mild recessions have intervened during an extraordinary long-run expansion. Throughout this period, the American economy has more than doubled, growing by nearly 125 percent. The annual growth rate, compounded over nearly a quarter century, has averaged 3.4 percent. It is a pace that has been the envy of major democratic industrial nations around the world.