An Economic Opportunity Missed

If you look at the US GDP growth since 1947, you’ll notice that the recovery magnitude always matched the recession magnitude except for the last one.

I’ve annotated the graph to show the recessions and recoveries in like color ellipses and the pair to the right represents our last recovery.  The zero GDP growth line is shown in clack and notice that with the exception of the last “recovery”, the magnitude of the recovery has equalled or exceeded the magnitude of the recession.

us-gdp-graph-2

Up until this last recession/recovery cycle, it used to all make sense. Recessions are part of the economic cycle and the Free Market would do what it always does, bounce back in like magnitude.

Except for the Obama years…..

Notice this last recession was severe but the recover was nothing but blah. The “recovery” has averaged around a 2% GDP growth rate and 2016 came in at a pitiful 1.6%.

From the WSJ article:

Speaking of weak, growth for all of 2016 clocked in at 1.6%, the slowest since 2011 and down from 2.6% in 2015. That marks the 11th consecutive year that GDP growth failed to reach 3%, the longest period since the Bureau of Economic Analysis began reporting the figure. The fourth quarter also rings out the Obama era with an average annual growth rate of 1.8%, which is right down there with George W. Bush for the lowest among modern Presidents.

Mr. Obama inherited a deep recession, but that makes the 2.1% growth average since the recession ended all the more dismaying. You have to work hard to suppress growth after a deep downturn, and Mr. Obama did that by putting income redistribution ahead of growth as a policy priority. He achieved the remarkable feat of slower growth and more inequality.

Massive regulation and other anti-business policies of Obama (and yes, George W. Bush too) handcuffed the US economy and that means there is a ton of potential energy in the economy just waiting to be released once the US government reverses course. Which is exactly what will happen in the next 2 years with a new style Republican control of the Executive and Legislative branches of government.

Just watch!

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2 Responses to An Economic Opportunity Missed

  1. blaine says:

    When Reagan entered office, there were 70,000 pages of regulations in the Federal Register.

    At the end of Reagan’s first term he had cut them down to 46,000 pages.

    It took the next 20 years, ( 2nd Reagan term, both Bushes and Clinton,) to grow the Regulation pages back to 70,000 which is what Obama started his term with.

    Then Obama went to town and added 27,000 pages in the next eight years with thousands more pages in the pipeline. If Trump had not issued a freeze on new regulations, there would be well over 100,000 pages of regulations in the Federal Register.

    I doubt Trump can get that down to 25,000 pages.

    But one can always dream.

    • cosmoscon says:

      Amen to that. I feel sorry for young entrepreneurs starting businesses that are swamped with a massive bureaucracy that hinders them. I have hope that things are about to get better but I’ve been disappointed before.

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