The Not So Great Great Recession

I have a commentary on National Review OnLine pointing out that the so-called Great Recession hasn’t been that great. In fact, it’s really just on the more severe side of normal. Yet, supporters of aggressive national fiscal policy still justify more government spending, including a second Stimulus program, on the purported severity of the current recession.

As I point out:

“True enough, the Great Recession lasted 18 months. That’s the longest recessionary period since 1929. But this fact reveals far less than the president implies. The Great Depression was a decade-long economic roller coaster. The economy fell into a 43-month abyss, grew for a while starting in 1933, and then plummeted again into recession in 1937. By some estimates, unemployment peaked at one third of the national labor force.

“The Great Recession isn’t anywhere close to those numbers. While the president has accurately called the absolute numbers of jobs lost “unprecedented,” the economy is so much larger now that the official unemployment rate has barely nudged up to the 10 percent mark. In 1929, the economy generated about $977 billion in goods and services (in 2005 dollars). In 2009, in the midst of the Great Recession, the economy generated $12.9 trillion (down from $13.2 trillion in 2008).

“Indeed, the Great Recession is significant only when compared with the relatively mild recessions of the recent past. Most recessions have been short and shallow. The recession of 1973—75 was 16 months long, and unemployment peaked at 8.5 percent. The recession of 1981—82 was also 16 months long, and unemployment peaked at 9.7 percent — about where it stands today.”

More of Reason Foundation’s work on the Stimulus, bailouts and the recovery can be found on our page devoted to the issue, including extensive analyais by Director of Economic Research Anthony Randazzo.