Tuesday, February 12, 2008

Last 25 Yrs.: Most Stable Economy in U.S. History

Over the last 25 years, the U.S. economy has been in recession only 5.3% of the time, compared to the much higher frequencies of recessions in previous periods of comparable length (see graph above).
The U.S. economy has become increasingly more stable over time (see graph above). Since 1985, real GDP growth has fluctuated in a range between 0 and 5%. Despite a slowdown, or even a recession, we are fortunate to be living in the most economically stable period in U.S. history, with the lowest frequency of recessions in history.

10 Comments:

At 2/13/2008 12:54 AM, Blogger vulcanhammer said...

There seems to be three periods on the second graph: Pre-1960's-wild fluctuations. After 1960 but before 1983(?)-less volatility. After 1983 to present-pronounced stabilization. Question: Would it be fair to surmise that the progression towards economic stability be due to economic liberalization? Or are there other mitigating factors?

 
At 2/13/2008 8:56 AM, Anonymous Anonymous said...

You and Kudlow are finally coming around to the weak economy and admitting the hint of recession. What took you so long? I've known this for months and I'm not an economist.

Admit defeat...

 
At 2/13/2008 9:09 AM, Anonymous Machiavelli999 said...

I wonder if the "evil Fed" and us printing money is actually not a bad thing but a stabilizing mechanism.

 
At 2/13/2008 2:06 PM, Blogger spencer said...

This sure makes the modern mixed economy with large government look a lot better then the old small government economy.

Some of the post WW II breakdown into shorter periods may be premature, but on average since WW II the time in recession has only been 15%.

On the negative side -- the great moderation since the early 1980s -- has also been associated with a moderate slowing of overall growth from about 3.5% to about 3%.

 
At 2/13/2008 2:54 PM, Anonymous Anonymous said...

spencer:

According to Al Gore, global warming has also increased in the last 25 years. Maybe the economic stability is due to global warming.

 
At 2/13/2008 3:04 PM, Anonymous Heretic38501 said...

Those intervals aren't even. For example the middle two are 27 years while the last is 25. If the U.S. economy stayed in recession another two years the % would jump to 13.2%.

This still supports the overall claim but it has to make one wonder how sensitive that is to selection of interval lengths which BTW are always supposed to be even.

 
At 2/20/2008 3:41 PM, Anonymous Anonymous said...

Don’t believe one optimistic word from any public figure about the economy. They are all part of the problem. Its like a game of Monopoly. The richest 1% of Americans now hold more than 1/2 OF ALL UNITED STATES WEALTH. That is more than the upper, middle, and lower classes combined. This is EVEN AFTER you account for all of this ‘good will’ ‘humanitarian’ BS from celebrities and executives. As they get richer and richer, less wealth is left circulating beneath them. This is the single greatest underlying cause for the state of our economy. Now, a recession is inevitable. The middle class can no longer afford to sustain their share of the economy. Their wealth has been gradually transfered to the richest 1%. But the rich won’t stop. They will do whatever it takes to get even richer. Leaving even less of the pie for the other 99% of us to share. This is going to end just like a game of Monopoly. A total collapse of the US economy. Probably within a decade. The richest 1% will live like royalty while the rest of us fight over jobs, food, and gasoline. So Don’t fall for all of this PR CRAP from Hollywood, Pro Sports, and Wall Street. Remember: They are filthy rich EVEN AFTER their tax deductable contributions. Greedy pigs. Now, we are headed for the worst economic and cultural crisis of all time. Crime, poverty, and suicide will skyrocket. SEND A “THANK YOU” NOTE TO YOUR FAVORITE MILLIONAIRE. ITS THEIR FAULT. I’m not discounting other factors like China, sub-prime, or gas prices. But all of those factors combined still pale in comparison to that simple equation at the top of this entry. Anyway, they are all related. If it weren’t for the OBSCENE distribution of wealth within our country, then the middle class would have had a much better bottom line over recent years. There never would have been such a market for sub-prime. Which by the way, was another trick whipped up by greedy bankers and executives. IT MAKES THEM RICHER. Anyway, the credit industry has been endorsed by people like Oprah, Ellen, Dr Phil, and many other celebrities. So don’t fall for their ‘humanitarian’ BS. ITS A SHAM. Bottom line: The richest 1% will soon tank the largest economy in the world. It will be like nothing we’ve ever seen before. God help us.

 
At 2/21/2008 3:08 AM, Anonymous Anonymous said...

It's easy to avoid recessions when you're willing to "borrow" economic growth from future generations via deficit spending.

When a slowing economy becomes evident , just ramp up miltary or other spending and , VOILA ! , no recession.

If we avoid a recession in 2008 , it will only be because we spent $4-500 billion ( $7-800 bill. if you count SS trust fund raiding ) of borrowed money. Call it the Super-stimulus Package.

From WWII to 1980 , debt as a % of GDP declined , while since 1980 it has steadily increased ( with a brief exception during the Clinton years ).

I'll gladly accept an occasional recession if it means not ripping off future generations. Somehow , I doubt you would agree.

 
At 2/29/2008 11:36 AM, Blogger M. J. said...

When GW Bush took office in 2000 he said "I see a recession coming." He gave the US Treasury's surplus back to us, which happened to be $600, and he lobbied to have the way we had traditionally counted unemployment to make it appear we had avoided the coming recession. He was gifted 9-11 and took us to Iraq to get "the man who tried to kill my daddy." We have not spent the 2, 20 or 200 Billion this "war" was supposed to cost but over a trillion and it is said will cost 17 trillion by the time we pay for all the vets.

The conflict is dying down, fewer war machines are being destroyed, people involved are getting laid off, the debt is overwhelming, and the Republican's and Greenspan's Easy money plan has just about destroyed the housing industry. Swarznegger didn't want the rich to pay more for their cars so he recended the tax increase and now we're talking about firing teachers to make ends meet. But as others have said on this blog, the rich are getting richer, huge houses are being built and huge tracts of land are being bought. Gold is nearly $1,000 an ounce. I can lay this recession at the feet of the Republicans with their spend but don't tax (but we'll call them fees) policies.

 
At 8/23/2008 12:08 AM, Blogger TrinityFish said...

All I hear here is a bunch of people griping about rich people. This is all jealousy. Who are you to say that because someone earns more, they should pay a bigger percentage? The Constitution states we are all created equal. Therefore we should all pay equal. It is wrong to say that because someone is successful they should be punished for it. Who cares if they have more left after paying their percent, THEY EARNED IT! Don't be mad at them because you lack the ability to do what they have done. Gripe as you may, you know that you wish you were them. America has become a group of complainers that want to put blame on to someone else to make themsleves feel better. The government didn't make a bad real estate market, people buying ridiculously huge houses THEY DIDN'T NEED did that. Unemployment! HAHAHAHA. Anyone can get a job. I need 6 more employees for my store right now but no one wants to work fast food because it's "beneath them." Grow up and do what you need to do, don't make excuses and don't blame others!

 

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