We are now 7 quarters into our recovery from the previous recession. I have long thought it time to conduct a review of this current recovery as compared to previous recoveries.
I have gone back to the previous 4 recessions and their recoveries. Above is a graph showing the growth of GDP for each recovery starting with the date in which the NBER calls each recession cycle.
The numbers above reflect the GDP growth in current dollars. Further, I have only gone out 12 quarters, or 3 years. Anything past this and I think we have normal economic cycles taking place that have little to do with the recovery efforts put in place during the recessions described.
There has been little secret that the current administration holds the previous administration responsible for the recession. However, if that is true, the current administration is responsible for the recovery. So, how has it done?
At this point, the Obama’s recovery is only slightly ahead of any of the other 3. The current quarter represented a 4.0% increase in GDP over the previous quarter. The only other recovery that had a worse showing was the Reagan recovery of 1982; it had a 3.9% increase. However, unlike the Obama recovery, the Reagan recovery had significant growth for the first 6 quarters. Obama’s recovery has not shown that degree of success.
Reagan vs Obama
Here is the direct comparison:
The visual is clear, the Reagan recovery was much more vibrant than the current Obama recovery. While Obama did better this quarter, the lack of growth in the preceding quarters is disappointing.
Obama vs Bush
Perhaps a more damning comparison, at least for this specific political cycle, is the comparison of Obama vs Bush:
Here the Obama recovery is very similar to the previous Bush recovery. However, the pressure is on. Beginning in the 8th quarter on, Bush had a very impressive record of strong GDP growth.
We’ll see if Obama is able to match that record.