Tuesday, February 7th, 2012 and is filed under Blog
It is clear that the economy and the job market have ticked up over the past few months. However, it is important that we understand the magnitude of the recession and the commensurate recovery that is needed to countermand its damage.
In order to recover from a recession, GDP and the job market must grow just as sharply in the recovery period as they retracted during the recession – just in order to break even. The great miracle of the American economy since WWII has been its ability to not only recover from the nadir of the recession in relatively short order, but to emerge from the recession even stronger.
Simply put, that is not occurring this time around. Our economy and job market are not growing quickly enough to ever recover from the Great Recession. The growth is certainly not robust enough to keep up with population growth and make the economy and job market stronger than they were prior to the recession.
Yesterday, Hoover Institute economist (and frequent WSJ op-ed contributor) John Taylor, provided this vital context. Using trendlines and charts, Taylor compares the recovery of this recession to that of the early ’80s, during Reagan’s tenure. Take a look at the contrast between the employment-to-population ratio trendlines in the two recoveries:
Despite the moderate job growth, it will take year to replace the 9 million jobs lost in the recession. By the time we catch up, the population will outpace job growth by such a degree that we will never reach equilibrium.
Nothing will fundamentally change until we restore our economy to one that is purveyed by the unencumbered free-market.
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