By Anthony B Sanders | 07.31.16

There is little doubt (unless you listen to politicians and their sales force) that the recovery from The Great Recession has been underwhelming.

In fact, it is the first recovery since 1930 where the annual rate of growth in real GDP has not exceeded 3%. Although the brief interval between the 1981 and 1983 recessions only generated 2.6% annual growth during 1982. But one year of +2.6% YoY real GDP growth sandwich between 2 recessions hardly makes an economic recovery.

And this dubious achievement of sub-3% real GDP growth was in spite of the massive intervention of the Federal Reserve in terms of the Fed Funds effective rate and quantitative easing (QE).

In terms of U-3 unemployment, the peak unemployment rate of The Great Recession was less than the peak rate of the 1982 recession. But the decline of unemployment after the 1982 recession was more impressive (down from 11.4% to 5% or a change of 6.4) than the recovery from The Great Recession (down from 10.6% to 5.1% or a change of 5.5).

Notice that after every recession the unemployment rate improves, just some more than others. But U-6  (total unemployment plus marginally attached workers) underemployment remains dauntingly high, particularly when compared to the recoveries from the previous two recessions.

But what REALLY hasn’t improved since The Great Recession is median household income. Since the end of 2008, median household income YoY has grown an average of 1.2%. But since 1983, median household income grew an average of 3.4% YoY (until 2014).

Average hourly earnings YoY is also lower since 2008 than the average from 1984 to 2008 (+3.2% YoY versus 2.1% YoY).

In addition to the Fed’s intervention, did I mention the Federal government gorging on debt issuance at low rates to fund the government?

Yes, the attempted recovery from The Great Recession (which was not as bad as the 1982 recession in terms of unemployment) required massive market distortions from The Federal Reserve and a gargantuan serve in Federal government borrowing. All that stimulus to generate low wage growth. Talk about the effect of over-regulation and misguided economic policies!

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