Diminished Expectations

In 1981, Ronald Reagan had to deal with a fairly sharp, intense recession, with some fairly intense “negative growth”:

1981 Q04: -4.5895

1982 Q01: -6.5220

1982 Q02: 2.1923

1982 Q03: -1.4300

For those of you who weren’t around back then?  It was a nasty little downturn, especially coming on the heels of the sluggish, stagflation-addled seventies.

1982 Q04:  0.3890

1983 Q01:  5.3465

1983 Q02:  9.4443

1983 Q03:  8.0625

1983 Q04:  8.5095

1984 Q01:  8.1868

1984 Q02:  7.2118

Long before he started stretching the Constitution out of shape, Obama broke one other, less formal rule – really more of a truism:  as a very broad rule, sharp recessions, left on their own, tend to have sharp recoveries.  Reagan’s recession was a sharp, intense one, accompanied by the worst unemployment since the Great Depression (only tied in late 2009 by Obama’s recession).

And Reagan got out of the way, and let the market heal the economy (except of course the defense sector – but then, that’s never part of the “free market”) heal itself.

And it came roaring back much bigger and better than ever.

Obama, of course, took office in the midst of another sharp, intense downturn.

And six years later, he’s doing the end-zone happy dance as he claims a 5% growth in GDP.

Now, let’s presume for a moment that that 5% “growth rate” is organic (although it most assuredly is not).

It’s six years into a sharp recession.   Left to its own devices – without “Quantitative Easing”, without “Too Big To Fail” and skyrocketing energy prices, without Obamacare – we should have been seeing much better growth than this…

…in 2010 or 2011.

But during the Obama Recession, like the Great Depression, the economy was left to pretty much the opposite of “its own devices”.