Just How "Great" has The Great Recession Been?
"Great Recession" has really stuck as the name given to the downturn that officially began in late 2007 and officially ended in mid-2009... and unofficially started back in 2006 and unofficially continues in many ways to this day.
The downturn certainly has felt greatly awful, but how does it measure up against other recessions? Was it really and truly "Great?"
The government has just gotten around to releasing the updated data for the period that included the 2007-2009 recession. Calculated Risk has the updated graphs covering the four main economic measures used by the National Bureau of Economic Research's Business Cycle Dating Committee in determining start and end dates of US recessions, and as you can see, The Great Recession was indeed quite a bit nastier than all other modern downturns.
Calculated Risk (http://www.calculatedriskblog.com/)
Recession Measures
By request, here are four key indicators used by the NBER for business cycle dating: GDP, Employment, Industrial production and real personal income less transfer payments.
Note: The following graphs are all constructed as a percent of the peak in each indicator. This shows when the indicator has bottomed - and when the indicator has returned to the level of the previous peak. If the indicator is at a new peak, the value is 100%.
There graphs show that no major indicator has returned to the pre-recession levels - and most are still way below the pre-recession peaks.
Project Syndicate
The Second Great Contraction
Kenneth Rogoff
CAMBRIDGE - Why is everyone still referring to the recent financial crisis as the “Great Recession”? The term, after all, is predicated on a dangerous misdiagnosis of the problems that confront the United States and other countries, leading to bad forecasts and bad policy.
The phrase “Great Recession” creates the impression that the economy is following the contours of a typical recession, only more severe - something like a really bad cold. That is why, throughout this downturn, forecasters and analysts who have tried to make analogies to past post-war US recessions have gotten it so wrong. Moreover, too many policymakers have relied on the belief that, at the end of the day, this is just a deep recession that can be subdued by a generous helping of conventional policy tools, whether fiscal policy or massive bailouts.
But the real problem is that the global economy is badly overleveraged, and there is no quick escape without a scheme to transfer wealth from creditors to debtors, either through defaults, financial repression, or inflation.
A more accurate, if less reassuring, term for the ongoing crisis is the “Second Great Contraction.” Carmen Reinhart and I proposed this moniker in our 2009 book This Time is Different, based on our diagnosis of the crisis as a typical deep financial crisis, not a typical deep recession. The first “Great Contraction” of course, was the Great Depression, as emphasized by Anna Schwarz and the late Milton Friedman. The contraction applies not only to output and employment, as in a normal recession, but to debt and credit, and the deleveraging that typically takes many years to complete...