U.S. Economic Expansion Stronger Over Last 4 Quarters Than Following the Last Two Recessions
Today's GDP report from the BEA raised a lot of concerns about the economic recovery, based on headlines and reports like this:
1. Steep decline in GDP growth raises alarms,
2. US recovery loses steam,
3. Double-dip feared as US economic growth loses pace, and
4. The closer you look at the GDP report, the uglier it gets, etc.
But how does GDP growth in this recovery (assuming the recovery started in third quarter of 2009) over the last four quarters (1.6%, 5%, 3.7% and 2.4%) compare to output growth in the four quarters following the last two recessions in 1990-1991 and 2001? Pretty good actually, see the graph above showing real GDP growth in the one-year periods (four quarters) following the last three recessions.
Sure, real GDP growth has slowed from 5% to 3.7% to 2.4% over the last three quarters, but following the 2001 recession real GDP slowed even more, from 3.5% to 2.1% to 2% to 0.1%. And looking at the average growth over the four quarters following the last three recessions, the average 3.18% real GDP growth over the last year was higher than the 1.93% following the 2001 recession and higher than the 2.63% following the 1990-1991 recession. Keep in mind that the economic recovery that started in 1991 was the longest (120 months) and strongest economic expansion in the history of the U.S.
So what about a headline like "U.S. economic expansion stronger now than at the beginning of the last two recoveries?"