9 Charts Showing Just How Bad This Recovery Has Been

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How does the current recovery compare to those of the past? The following charts provide a series of answers, plotting current indicators (in red) against the average of all post–World War II recoveries (in blue). The x-axis shows the number of months since the end of the recession.The dotted lines are composites of prior recoveries representing the weakest and strongest experiences of the past. The recovery’s start date is set using the recession dates established by the National Bureau of Economic Research’s Business Cycle Dating Committee. By the committee’s methodology, the current recovery began in June 2009. Despite some bright news recently, the pictures underline the economy’s weakness since that date.

This recovery chart book replaces the cycle chart book, which plotted the downturn as well as the recovery. Those interested in the previous presentation can view updated versions here: HTML and PDF.

From CFR.org. Reprinted with permission.

Real GDP

  • Real GDP is growing, but weakly compared with the postwar average recovery.
  • The recovery from the 1980 recession was even weaker at this stage, but that reflected a double-dip recession in 1981.
  • The economy would have to grow at a 7.6 per cent annualized rate in order to catch up with the average postwar recovery by the end of 2012.
  • The consensus forecast for 2012 growth as reported by Bloomberg is 2.1 per cent, up just slightly from a forecast of 2.0 per cent as of last October.

From CFR.org. Reprinted with permission.

Nominal Housing Prices

  • Soft home prices have been central to the weakness of the recovery.
  • The continued weakness of nominal home prices is a postwar anomaly.

From CFR.org. Reprinted with permission.

Household Deleveraging

  • In every previous postwar recovery, the stock of household debt has risen as the recovery has begun.
  • In the current recovery, the collapse in home prices has severely damaged household balance sheets. As a result, consumers have avoided taking on new debt.
  • The result is weak consumer demand and, hence, a slow recovery.

From CFR.org. Reprinted with permission.

Non-Farm Payrolls

  • The slow recovery is obvious in the labour market, where job growth remains painfully sluggish compared to the average recovery.
  • The recent uptick at the end of the Current Recovery line (red) is the result of encouraging payroll data announced on January 6th 2012.

From CFR.org. Reprinted with permission.

Industrial Production

  • Because of the depth of the recent recession, one might expect stronger-than-average improvement in industrial production.
  • Despite the predicted snapback, the increase in industrial production during this recovery is actually slightly slower than in the average postwar case.

From CFR.org. Reprinted with permission.

Industrial Capacity

  • Capacity in manufacturing, mining, and electric and gas utilities usually grows steadily from the start of a recovery.
  • However, during the current recovery, investment has been so low that capacity is actually declining. Plants and machinery are depreciating faster than they are being installed.

From CFR.org. Reprinted with permission.

World Trade Volume

  • The growth in world trade exceeds even the best postwar experiences.
  • However, this reflects the depth of the fall during the recession.

From CFR.org. Reprinted with permission.

Federal Deficit

  • The federal deficit since the start of the recovery has been much higher than in previous postwar cases.
  • Although the deficit has shrunk slightly, its level creates significant challenges for policymakers and the economy.

From CFR.org. Reprinted with permission.

Vehicle Miles Traveled

  • The traditional American enthusiasm for the road has been dulled by a combination of weak recovery and high fuel prices.
  • When compared to other postwar recessions, total vehicle miles traveled in this current recovery has not only lagged the average, but has registered no growth whatever.

From CFR.org. Reprinted with permission.

Americans In Focus

Take a closer look at how the economic malaise is impacting Americans.
Click here to meet Paul Pittman, Mr. U.S. Economy >

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