A tale of two recoveries

Updated
 
A tale of two recoveries
A tale of two recoveries

As many on the right struggle to respond to encouraging economic news, several Republican officials have crafted yet another talking point to consider: the nascent, fragile recovery isn’t as strong as the one we saw in 1983 and 1984.

Several [House GOP] members compared the current economic recovery unfavorably to the rebound from recession during the Reagan administration. In January 1984, as Reagan was preparing to run for reelection, the unemployment rate fell to 8 percent, marking an even more marked decline from a jobless rate of 10.4 percent a year earlier.

Rep. Cathy McMorris Rodgers (R-Wash.) said Reagan inherited a “more difficult, deeper recession” than Obama, who has repeatedly called the economic collapse he inherited the most serious since the Great Depression of the 1930s.

At a certain level, this gives away the store, in much the same way Virginia Gov. Bob McDonnell (R) did yesterday – once Republicans argue, “This recovery isn’t as good as the one in the ’80s,” they’re necessarily conceding that the economy has improved under Obama. They are, after all, referencing a “recovery” directly.

But let’s put that aside for now. Looking at this on the substance, proponents of the “tale of two recoveries” argument deserve credit for creativity, but the GOP talking points on this are deeply misleading, if not ridiculous.

To McMorris Rodgers’ point, Reagan did not inherit a “more difficult” recession. In the early 1980s, the Fed kept interest rates high to combat inflation, but to suggest that was a “deeper recession” than the more recent crisis is just foolish. In 2008, we experienced a crash of the global financial system – the kind of crisis from which is there is no easy or quick recovery. When we hear the phrase “worst economic conditions since the Great Depression,” it’s not just a platitude; it’s an accurate description of what transpired.

As a result, we’re looking at two recoveries with key, qualitative differences. In 1983, the Federal Reserve had decided it had held back the economy long enough, and decided to take its foot off the brake. A robust recovery soon followed. The Great Recession that technically began in late 2007, and then intensified greatly in 2008 before bottoming out in 2009, was a far more severe global crisis, and it therefore takes far longer to get back to where we were.

Yes, the current recovery isn’t as strong as the one in 1983, but that’s because of the nature of the recessions themselves. The comparison itself borders on silly. It’s like saying a patient who had an appendectomy recovered faster than a patient who’d been hit by a bus – and then saying the latter’s physician must not have been as good a doctor.

A tale of two recoveries

Updated