October 31, 2007
RWR MAY BE GONE, BUT HIS GOOD WORKS REMAIN:
The Long Boom: An Amazing Economic Expansion Turns 25 (James Pethokoukis, October 31, 2007, US News)
If the toxic cocktail of a mortgage meltdown, a credit crunch, and surging oil prices should sicken the American economy enough to cause a recession—an actual shrinkage of our gross domestic product—it would be a pretty uncommon experience for many Americans. Over the past 25 years, the United States has enjoyed a marvelous stretch of almost uninterrupted economic growth.In fact, November marks a wonderful double anniversary. The current six-year economic expansion dates from November of 2001, while the long economic boom dates from November 1982. (Both dates come from the National Bureau of Economic Research, which defines a recession as a "significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales.")
Consider this: Since 1982, according to the NBER, the economy has suffered two recessions—in 1990-91 and in 2001—for a total of 16 months. By contrast, in the previous 25 years, the economy suffered six economic downturns for a painful total of 67 months. Even worse, the 1973-75 and 1981-82 recessions were two of the nastiest of the 20th century. Is it any wonder that the stock market basically went nowhere from 1966 to 1982, with such big hurdles to overcome? The Dow Jones industrial average hovered right around 1000 for more than a decade and a half. But since August 1982, when it bottomed at 776, the Dow has risen almost 1,700 percent. That ascent reflects an economy that has nearly tripled from $5.2 trillion in 1982, adjusted for inflation, to $13.9 trillion today.
Indeed, the folks who officially date these things concede that when they finally amass all the data--which takes decades--neither of those slowdowns will qualify as recessions. So it's 25 uninterrupted years since Volcker and Reagan slew the inflation beast, broke Labor, and initiated the globalization epoch. Posted by Orrin Judd at October 31, 2007 2:24 PM
Other achievements include that small matter of the burial of the jailhouse of nations.
Posted by: Lou Gots at October 31, 2007 4:40 PMand because of it, the global Left can play pretend with important issues like social justice, global warming, etc...name the cause.
Had we fallen of Jimmy Carter's economnic cliff, the controversy would have been very different.
Posted by: Perry at October 31, 2007 5:31 PMAs Pethokoukis points out this is an unprecedented boom. In fact, it is almost certainly the greatest economic boom in history.
There is an old saying that the stock market has predicted 7 out of the last 4 recessions. With this tongue-in-cheek saying, stock market pros point out that predicting recessions is not easy.
However, knowing when one has ended should not be as difficult. I can remember back in 1993, someone prefaced a remark to me by saying '...the recession we are in is probably the cause of the decline in...'
I politely pointed out that we were not in a recession and had not been in one for a couple of years and even that one had barely been a blip except for the impact it had on the 1992 presidential election.
A dumbfounded look of consternation ensued because this intelligent person 'knew' we were in a recession. I eventually convinced him through a review of statistics from NBER, but it was not easy.
From a political perspective, the question we really need to address is how do we preserve and enhance the economy's ability to grow.
Posted by: Kurt Brouwer at November 1, 2007 3:19 PMIn his book, Deflation, Chris Farrell points out the similarity to the good deflationary period from the late 1800s to the outbreak of WWI.
Posted by: oj at November 1, 2007 7:13 PM