In case you missed the news, the recession is over. As of June 2009, no less. So say the economic sages at the National Bureau of Economic Research, the arbiter of these things. According to the NBER, the recession began in December 2007 and lasted 18 months — the longest since the Great Depression. That it’s over is good news, but there’s a “but.”
“On the other hand,” writes The Wall Street Journal, “the recession was only two months longer than the 16-month downturns of 1973-1975 and 1981-82, the two other most serious post-World War II periods of falling economic growth. The 2007-2009 downturn was painful but not extraordinary in historical context. What is different about this period is the relative weakness of the economic recovery.”
For years after 1982, GDP growth was at least 4 percent. Today, GDP remains below that of the fourth quarter of 2007. One difference is that in 1983, Ronald Reagan’s cuts in marginal tax rates were taking hold, while in 2010, the economy is bracing for trillions of dollars in tax increases in January. The current administration’s “recovery” policies have also been a major drag on economic growth, no matter how they may crow about their “success.”
Since January 2009, the economy has lost 3.2 million jobs, and the current 9.6 percent unemployment rate is higher than the 9.5 percent in June 2009 when the recession supposedly ended. U.S. household net worth fell by another $1.5 trillion in the second quarter, and is now $10.7 trillion less than at its high point in 2007. Foreclosures are at record highs.
Perhaps all of this is why some of the jobs now being shed are those of Barack Obama’s economic advisers. He may say on the campaign stump that Tea Party supporters are “misidentifying who the culprits are” for this economic trouble, but heads are rolling at the White House. “This is tough, the work that they do,” Obama said. “They’ve been at it for two years, and they’re going to have a whole range of decisions about family that will factor into this as well.” As in spending more time with family.
Lawrence Summers, chairman of the president’s National Economic Council, is heading back to Harvard. Apparently, the “Recovery Summers” is over. Other recent departures include budget director Peter Orszag and head of the Council of Economic Advisers Christina Romer. Meanwhile, Herb Allison, who took charge of the Troubled Asset Relief Program in April 2009, is stepping down. That leaves Treasury Secretary Timothy “Turbo Tax Cheat” Geithner as the lone remaining member of Obama’s original economic team.
We’ll say it again: In order to generate real economic growth, tax rates must remain level (or, even better, decline), regulation must ease and, in general, government must shrink. Of course, Obama and his refurbished economic team are unlikely to come to the same conclusion.
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