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Home Publications Blogs Beat the Press Fits and Starts Are Not Common in the Early Stages of a Recovery Following a Steep Downturn

Fits and Starts Are Not Common in the Early Stages of a Recovery Following a Steep Downturn

Thursday, 29 July 2010 13:24

The Post noted the weak economic data in recent weeks and then told readers:

"fits and starts are common during early stages of economic expansion."

This is not true for recoveries from steep downturns like the one the U.S. has just experienced. In the first four quarters of recovery following the 1974-75 recession the economy grew 3.1 percent, 6.9 percent, 5.3 percent and 9.4 percent. In the first five quarters following the 1981-82 recession the economy grew by 5.3 percent, 9.3 percent, 8.1 percent, 8.5 percent, and 8.0 percent.

We should be seeing robust economic growth right now based on past patterns. It is a very bad sign that we are not.

Comments (7)Add Comment
We’re in the beginning stages of a deflationary spiral
written by Scott ffolliott, July 29, 2010 2:22
We’re in the beginning stages of a deflationary spiral the Federal Reserve Bank has so assiduously tried to avoid
written by izzatzo, July 29, 2010 2:48
Patient: Hello doctor, I think I'm affected with double dip depression with all these fits and starts but no recovery.

Doctor: Let's change your anti-depressant to a Republican placebo stimulant, the new deficit hawk drug that's been out for two years called "Don't Do Something, Just Stand There". The only side effect is you'll feel worse before you get better until the old drug wears off.

Patient: When will I feel better?

Doctor: Right after the mid-term elections. That's how long it takes for your body to completely metabolize the chemicals from your Keynesian Injection Pump which was recently recalled by the FDA for causing Double Dip Depressionitus.
Predictions are uncertain...
written by AndrewDover, July 29, 2010 5:58
Were 74-75 and 81-82 housing wealth driven recessions? Even if they were comparable, why would an uncommon pattern imply a "ery bad sign" for the future?
written by Queen of Sheba, July 30, 2010 6:53
The recovery from this downturn seems to be doing quite well in boosting the economies of China and India. Granting federal funds to businesses to kickstart our economy while permitting those funds to be used to finance offshore ventures is useless, if not madness.

And the Post is not helping by trying to salve the pain this recession is causing by lying to its readers about "fits and starts" during past recoveries. They would do much better by explaining to readers how and why this recession is different and how recovery will also be different.

But the Post is apparently not interested in doing "much better," as their recent stabs at explaining our economic troubles have been either disingenuous or flat-out dishonest.
Weak Recoveries in 1991 and 2001
written by Bill, July 30, 2010 10:26
Don't you think you should include 1991 and 2001 in the mix?

You seem to be expecting robust growth based on some pattern that does not take into account our reliance over the last two decades on bubbles to keep us floating.

The past decade was even worse because it relied so heavily on phantom wealth (housing atm / credit) for job creation.

Those jobs aren't coming back anytime soon and we will naturally consume less leading to more losses.

Keeping the rich fat (extending tax cuts) while the rest tighten their belts (austerity) will eventually lead to some bottom from which we will rise. But, not for a long time and not without a lot of suffering.

I'd rather see us continue to invest (more stimulus) with a focus on infrastructure, energy, and education. The future growth will make up for the spending and give us a stronger basis in the global economy. At the same time we make the necessary changes to strengthen entitlements through reform (HCR was only a start). Without it we will not be competitive.
written by PeonInChief, July 30, 2010 12:23
The 1981-82 recession was ended by consumer spending. In this recession it won't be ended by consumer spending because most consumers don't have any money.
The Alan Greenspan (& Co.) Mantra
written by Hugh Sansom, July 30, 2010 10:21
The "fits and starts" line is key feature of the dogma being offered by Alan Greenspan, Mark Zandi, and propagandists of their ilk — the same people who have been getting the economics wrong for at least the past three years.

But the 'reporting' in the Post or the Times or NPR, CNN, etc., is not about the facts about about the fiction necessary to get people to part with what little money they have left.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.