There are recoveries and then there are recoveries, and one pattern we've discussed here before is that an economy bouncing back from a recession should - according to the historical pattern - see pretty robust growth.
If for no other reason, an economy that's receded has a ways to go up to return to its mean.
Our friend Stephen Moore ran the numbers, looking at the recoveries that followed the last six recessions. For Barack Obama, the comparison demonstrates how not to do a recovery. It also points very clearly to the president you would look to as a role model for how to do it right:
The tepid growth rate so far in 2015 merely extends the track record of the 23 quarter post-Great Recession recovery. The annualized growth rate of 2.24 percent dead last compared to the six other recoveries since 1960, which averaged 3.97 percent after 23 quarters. This translates into nearly $1.7 trillion (in constant 2009 dollars) in absent economic growth.
But the more amazing comparison is that of the Reagan—which trounces this current so-called recovery. That recovery’s sizzling 4.8 percent annualized growth through 23 quarters was more than twice the rate of the current recovery. In other words, for every $1 of economic growth experienced during the present time, the Reagan recovery produced more than $2. As a result, the Reagan recovery gap now stands at a record $2.48 trillion of real annual GDP (in 2009 dollars). The economy is now more than 15 percent smaller than it would have been with Reagan style growth.
To get a handle on that last statement, consider that the current GDP is about $17.7 trillion. If we'd had growth like Reagan's during the past 23 months, it would be well over $20 trillion, and as Herman pointed out yesterday, that would be enough to turn our $500 billion deficit into a $500 billion surplus.
As to why we're not growing, we've of course discussed that ad nauseum. Today I would point to five policies Obama and the Democrats favor: 1. High corporate tax rates; 2. Higher minimum wage; 3. Mandatory employer-paid health insurance; 4. Quickie union elections; 5. Additional regulation of business. What do the five have in common? They all increase the cost of doing business, and thus reduce the capital available for investment and productivity.
Reagan's policies focused on reducing government-imposed costs on business so the private sector could drive economic growth. As Steve Moore points out above, that worked to the tune of 4.8 percent growth on average for the first 23 quarters of the recovery. Obama's average growth of less than half that is hardly surprising when you see how hostile he is to those who are in a position to drive the growth.
Obama always has an excuse when the economy sputters - the weather, you name it - but there has been one constant to the economy's sorry performance since the recovery began, and that constant is Barack Obama. He has succeeded at implementing the left-wing policies that reflect his worldview. And that has been a disaster for prosperity in this country. Let's stop pretending there are no historical examples of presidents who knew how to do this right. The best example occurred within most of our lifetimes, and while we shouldn't be looking for "another Reagan" because every candidate is an individual all his (or her) own, we should be looking for a candidate who understood the things Reagan understood about how to make an economy grow.
