Some great charts from economist John Taylor putting the weak economic recovery in some deep historical perspective. First, here is the three-year old Obama recovery. As Taylor points out, “The gap between real GDP and potential GDP (CBO estimates) is not closing at all. That is the main reason why unemployment remains so high.” It’s just not getting better:
Next, here is the Reagan recovery after the 1981-82 recession. Again, you have severe drop, but then the output gap between is closed.
But let’s go much further back and look at two recoveries that occurred after financial crises. Here’s the recovery after the Panic of 1907, a downturn which led to the creation of the Federal Reserve:
Finally, here is the Depression of 1893:
No Federal Reserve stimulus. No $800 billion American Recovery and Reinvestment Act. And yet, 100 years ago, the U.S. economy somehow managed to recover after two nasty downturns, each marked by a banking crisis.
Maybe we’re not doing it right.