Stronger Recovery Now Than in 1992 or 2002
From Jim Paulsen in today's Financial Times:
"Although this recovery is not as strong as those of the 1970s, on many metrics its first year anniversary has proven stronger than either of the last two recoveries during the previous 25 years.
1. Despite a significant slowdown in the second quarter of this year, real GDP growth in the first year of this recovery was 3 per cent compared with first year recovery gains of only 2.6 per cent in 1991 and 1.9 per cent in 2001 (see chart above).
2. Persistent private job creation took 12 months once the recession ended in the early 1990s and it took 21 months after the 2001 recession. This recovery began producing persistent private job gains only six months after the recession ended. Moreover, in the first 14 months of this recovery, 205,000 jobs have been lost. While this is surely disappointing, it compares with 220,000 and 935,000 cumulative job losses respectively at this point in the 1991 and 2001 recoveries.
3. Corporate profits have already recovered to the all-time record highs of the last recovery – one of the fastest profit recoveries in the post-war era.
4. To date, the current stock market recovery is the strongest since – and on a par with – the 1982 recovery.
5. Finally, the household debt burden (i.e., financial obligations ratio), while at a record high in early 2008, has recently improved to only average since 1980 and the household energy burden is now below average."
Conclusion: "Policy officials may want to consider that perhaps the current recovery is less a new-normal to be panicked over (with ostensibly never-ending monetary and fiscal stimulus) than simply just “normal” (for the past 25 years) which, like the last two recoveries, requires patience?"