Let’s Hear It for Growth … A Little Louder, Please

You call this a recovery?

Typically, the rule is this – the bigger the recession, the stronger the recovery.  By any measure, the recent recession was a whopper.  Yet gross domestic product (GDP) grew by only 1.8% for the first quarter of 2011.

In comparison, after the big recession that ended in 1983, GDP grew by at least 7.1% for five consecutive quarters and even grew by 9.3% in one quarter.

Of course, there are major differences between the most recent recession and the recession of the early ’80s:

  • The recovery of the ’80s was marked by The Federal Reserve Board’s emphasis on keeping inflation in check.  This recovery is noteworthy for The Fed’s desire to increase inflation.
  • The recovery of the ’80s benefited from tax reform and free-market solutions.  This recovery follows record government spending, including an $800+ billion economic stimulus program, and major reform of the healthcare and financial services industries.  While Congress extended Bush-era tax breaks, higher taxes are anticipated, given that the federal deficit has soared to more than $14 trillion.

For those who remain jobless or who have seen their standard of living drop, a little more recovery would be appreciated.

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