Opinion: A Tale of Two Economic Recoveries

(Sept. 21) -- You'd think the news that the Great Recession is officially over would be something to cheer about. On Monday, the National Bureau of Economic Research -- the official recession scorekeeper -- said the downturn that began in December 2007 ended way back in June 2009.

Anyone feel like celebrating?

The news is particularly unhelpful to the Obama administration right now.

First, it undermines the case for the economic stimulus. President Barack Obama has often claimed that the $800-plus billion stimulus package helped prevent the recession from becoming another Great Depression.

The trouble is that we now know the recession ended just as the stimulus money started to get spent. According to the White House's own 100-day stimulus report, issued at the end of May 2009, only $45.6 billion in spending and tax relief had gone out the door by then. In other words, less than 6 percent of the stimulus money was in the economy as the recession ended, making its role in stopping the downward spiral somewhat murky.

This news also makes it harder for Obama to blame President Bush for the nation's current economic troubles.

Obama rightly notes that he was handed a terrible economy. But now we learn that the recession he inherited was just five months away from being over when he took office. So while Obama doesn't own the recession in any way, shape or form, he certainly owns the recovery, which is now well into its 15th month.

The bigger problem for Obama, though, is that now that we have an official end date for the recession, we can compare the current recovery to previous economic recoveries. And that picture is not particularly flattering at all.

The most comparable recent recession in terms of length and severity was the one that started during the Reagan administration in 1981. It lasted 16 months, compared with the 18-month slump that ended last June. Unemployment topped out at 10.8 percent in the 1980s recession, and 10.1 percent in the last one.

But look what's happened during the recovery.

Fourteen months after the 1981-1982 recession ended, the unemployment rate had dropped to 8 percent, the Consumer Confidence Index had soared to more than 103, and the economy was cooking along at an average 7.7 percent quarterly growth.

This time around, unemployment is stuck at 9.6 percent, consumer confidence is at a depressing 53.5, and economic growth since the recession ended has averaged a comparatively paltry 3 percent (see chart).

The fact that President Ronald Reagan pursued a very different policy course -- one focused on across-the-board tax cuts, spending restraint and deregulation -- will only fuel questions about whether Obama's economic policies are helping or hurting this recovery.

Economists are quick to point out that the causes of these two recessions were very different, and that this can affect the trajectory of the recovery. And it is certainly possible that the depth and length of the slump would have been worse had Obama not acted as he did.

Maybe so. But that argument just got tougher to make convincingly.