Critics of President Obama claim that the current economic recovery is far slower than other post-recession recoveries and blame Obama’s policies for what they say could be more rapid growth. Putting aside for a moment the fact that much of Obama’s policies are laying in a heap of blocked policies in the Republican House and record number of filibusters by Republicans in the Senate, the fact is that post-financial crisis recessions are very different than normal economic recessions, and the current economic recovery is outperforming historic recoveries after recessions caused by financial crises.
In a January 2008 article written 1 week after Obama took office, economist Paul Krugman argued this very point and predicted that the recovery would be slower and longer than normal because the recession was caused by a financial crisis and not by the cyclical nature of normal economic recessions.
An April 2012 Bloomberg article makes the same point:
“Our research makes the point that the aftermaths of severe financial crises are characterized by long, deep recessions in which crucial indicators such as unemployment and housing prices take far longer to hit bottom than they would after a normal recession. And the bottom is much deeper. Studies by the International Monetary Fund concluded much the same….As our studies and many others have confirmed — including the misconstrued recent Fed study — financial crises leave behind deep recessions of long duration and considerable volatility.”
As the authors, both Harvard economists, point out, after a normal recession, the economy recovers quickly, within 1 to 2 years. But after a recession caused by a systematic financial crisis, the average time for the economy to regain the same pre-crisis GDP is 4.5 years. The same is true with unemployment rates, and housing prices take even longer. (In 10 of 15 post-WWII financial crises, unemployment rates did not recover for a decade or more after a financial crisis.)
When compared to other post-financial crisis recoveries, and especially when you consider the depth of the 2008-2009 recession, the current recovery is outperforming the historical average. Something tells me that Romney and the Republican Party will conveniently avoid this distinction when accusing Obama of failed policies as evidenced by a slow economic recovery.