Shallow Recessions, Shallow Recoveries
“It seems there is some easing in the pace of growth," said Lakshman Achuthan, the managing director of the Economic Cycle Research Institute, whose calculations are reflected in the accompanying charts.
(Charts showing data for all post-war expansions available from The New York Times website)
Economic recoveries in the decade after World War II were brisk affairs, but then they slowed. The pace of recoveries seemed to have stabilized in the 1980s and 1990s, he said, but “now we have taken another step down. We don’t know why.”
Mr. Achuthan believes the recovery that began in 2002 ended in October, as the economy entered a recession. “I have no doubt that we are in a recession now,” he said, although he added that it was possible that the National Bureau of Economic Research, when it eventually determines when the recovery ended, could choose a different month.
If Mr. Achuthan is correct, the annual rate of growth in the economy, as measured by real gross domestic product, was the slowest in this recovery of any, at 2.7 percent. The most lackluster prior recovery was the previous one, which ran from 1991 to 2001. Its average gain was 3.4 percent.
One possible explanation could focus on the fact that recessions have been milder in recent decades. If an economy does not go down far, then it will show less of a rise when it bounces back even if overall growth is robust.
That is true, but looking at economic cycles from peak to peak — in this case from the peak in March 2001 to the presumed peak last October — yields a similar perspective. The average growth rate over that stretch, not shown in the accompanying graphic, was 2.5 percent. The only weaker period from economic peak to peak came in the early 1980s, when a recovery lasted only six months before a new recession began.
The view of this recovery as an unusually weak one can also be seen in all four economic indicators that make up the index of coincident indicators, a way that the health of the economy is measured. Three of them are adjusted for inflation — industrial production, personal income, and manufacturing and trade sales — while the fourth is the growth in the number of nonagricultural jobs.
All of those are measured from the official beginning of a recovery to the official end, which in some cases can be well before a particular indicator turns up.
The postrecession trends in employment show particular signs of having changed. Before the recovery that began in 1991, the number of jobs always hit bottom at about the time the recession ended. But it took 14 months after the 1990-’91 recession officially ended for the number of jobs to rise the level when the recession ended. After the 2001 economic low, it took 28 months for the number of jobs to match the end-of-recession total.
Partly because of that, this was the first recovery in which the number of jobs grew by less than 1 percent a year. For the other three coincident indicators, it was the first recovery to show gains of less than 3 percent a year.
All numbers for the recent recovery are likely to change as data are revised, even if October does turn out to be the month the economy peaked, and the revisions could make the performance look better. But Mr. Achuthan said he thought the revisions were more likely to show that the growth rate was even slower than the numbers now indicate.