2008 record      


Economy: The official word from the group that serves as arbiter of our nation's economic cycles says the recession is over. Good news, of course. But fact is, the recovery is a far cry from what it should be.

We weren't surprised when the National Bureau of Economic Research (NBER) declared Monday that the recession ended in June 2009.

In March, April, May, June, July and August of that year, we told our readers repeatedly that the economy was emerging from its 18-month downturn, the longest recession since the Great Depression. We even predicted the economy would begin its next expansion in the third quarter of 2009.

We bring this up now only because we also said at the time to expect a far-slower-than-normal recovery, thanks in large part to the actions the then-new administration and its allies in Congress were taking or planned to take.

On May 12, 2009, we touted a coming "real recovery" due largely to the Fed's decision the previous December to slash interest rates to an unprecedented low of zero percent. But "unfortunately," we also noted, "the smothering hand of government — including massive spending, thousands of new rules, government takeover of key industries, higher taxes on energy, capital and incomes, and up to $4 trillion in added deficits by 2012 — will be felt everywhere."

On July 7, as the economy started to crawl out of its downturn, we warned: "We're facing the worst recovery since the Depression, and the entrepreneurs that fuel job growth are hunkering down to weather planned tax hikes in the trillions of dollars."

What's amazing is how little things have changed since we wrote those words more than a year ago.

President Obama, while acknowledging the economy is still slogging along 16 months after the recession ended, continued on Monday to insist "we're moving in the right direction."

But we're not. And while his administration and its defenders still claim stimulus spending, TARP and other White House initiatives have "created or saved" 3.5 million jobs, they haven't.

Since Obama took office in January of last year, the economy has shed 3.2 million jobs, according to the Bureau of Labor Statistics. Since the "recovery" began, we've lost 329,000. Today's unemployment rate of 9.6% is higher than the 9.5% at recession's end.

Yes, the broader economy has rebounded, but it's nothing to write home about. Using the NBER's real monthly GDP data, the economy expanded by roughly 2.8% in the year since the recession ended. But it's still 2.4% below its peak in early 2008.

The NBER itself warned against reading too much into its declaration, pointing out that "the committee did not conclude that economic conditions since (June 2009) ... have been favorable or that the economy has returned to operating at normal capacity."

In other words, it's not a jobless recovery — it's a job- loss recovery. The economy needs a GDP growth path of over 3% just to churn out the 1.5 million jobs needed each year to keep the unemployment rate from getting worse. So far, that hasn't happened.

As our own IBD/TIPP Poll shows, Americans see little difference between the economy before the recession ended and now.

History shows that to restore economic and job growth, spending must be slashed, taxes must be lowered, regulations must be eased and government must get out of business' way. The longer we wait, the more we suffer. Let that be the motto of the new Congress.

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