A Poor Recovery

Edward Lazear shares a depressing take on the recession in The Wall Street Journal (click here to read the whole thing).  Essentially, looking at some basic metrics, he argues that our “recovery” from the recession is very weak.  In fact, we haven’t even hit the average annual growth rates of the past sixty years.  We’re much lower – from the article:

The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators. Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground. No doubt, there are favorable economic numbers to be found, but overall we continue to struggle.

During the postwar period up to the current recession (1947-2007), the average annual growth rate for the U.S. was 3.4%. The last three decades have experienced somewhat slower growth than the earlier periods, but even in the period 1977-2007, the average growth rate was 3%. According to the National Bureau of Economic Research, the recovery began in the second half of 2009. Since that time, the economy has grown at 2.4%, below our long-term trend by either measure. At this point, the economy is 12% smaller than it would have been had we stayed on trend growth since 2007.

In other words, things are better than they were, but our enthusiasm should be tempered.  We’re improving our situation, but very slowly.  Self discipline and care are more important than ever if we hope to regain economic vigor.