Wednesday, August 15, 2012

Economic Recovery Weakest Since World War II

A new analysis shows that the most severe economic downturn since the Great Depression appears to be paired with the weakest three-plus year recovery since World War II.

An article from The Oregonian says that nine -- but not all -- of  the U.S. recessions since World War II have been followed by a recovery that lasted at least three years. The recovery that began in June 2009 is the weakest among these "long term" recoveries by just about any measure, according to analysis by the Associated Press (AP).

The U.S. unemployment rate -- 8.3 percent in July -- is the highest rate three years into an economic recovery. In addition, gross domestic product grew by 6.8 percent between the second quarters of 2009 and 2012. Gross domestic product grew by an average of 15.5 percent in the first three years of the eight other comebacks analyzed. Investment in housing, which grew by an average of nearly 34 percent three years into previous postwar recoveries, has risen by 8 percent since the second quarter of 2009. Comparisons of consumer and government spending three years into recovery also show the lowest levels among the recoveries studied.

The article notes that many economists say the agonizing recovery from the Great Recession is the predictable consequence of a housing bust and a grave financial crisis. The evaporation of credit and a 30 percent drop in housing prices erased trillions in home equity and brought construction to a near-standstill. These create additional strain and drag on the indicators studied, such as investment in housing and consumer spending. 

The Oregonian's full article provides a wealth of additional information.

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