Dolan Media Newswires
Long Island, NY – The story from the Obama administration, economists and other experts: It’s going to take time to get the economy revved up.
As reported by the New York Times in August, Lawrence Summers, director of President Obama’s National Economic Council, said, “The economy is not going to be back to normal for quite some time. Our problems weren’t made in a month or a year, and they’re not going to be fixed in a month or a year.”
But are such assertions based on economic reality?
During the post-World War II era, three of four quarters in 1949 saw negative growth. In 1950, real growth registered 17.2 percent in the first quarter, 12.7 percent in the second, 16.6 percent in the third and 7.2 percent in the fourth. Solid growth persisted into the first half of 1953.
From mid-1953 to mid-1954, economic growth was dismal. Subsequently, real gross domestic product growth registered 4.6 percent in the third and 8.3 percent in the fourth quarter of 1954, followed by 12 percent growth in the first, 6.8 percent in the second and 5.4 percent in the third quarter of 1955.
Large drops in GDP in late 1957 and early 1958 were followed by a rebound later in 1958 and in the first half of 1959.
Economic growth was negative in the second and fourth quarters of 1960. That was followed by positive growth into early 1969.
From late 1969 to late 1970, the economy again performed poorly. In the first quarter of 1971, however, real GDP growth jumped by 11.5 percent, followed by nine more quarters of growth.
The economy’s performance was dismal from the third quarter of 1973 through the first quarter of 1975.
That was followed by growth into the first quarter of 1976.
And, of course, the economy labored from the first quarter of 1979 through the fourth quarter of 1982.
Subsequently, it grew robustly through the end of the decade.
But the initial recoveries underperformed after the late 1990- 91 recession and the 2000-01 contraction. The problems were linked to misguided public policy decisions. For example, tax increases in the early 1990s and a phased-in/timid 2001 tax package delayed early recovery in each case. Recovery in the early 1980s did not kick in until the 1981 tax cut was finally and fully phased in at the end of 1982.
Unfortunately, once the current recession ends, recovery again promises to be underperforming due to astoundingly bad public policy measures including higher taxes, more workplace regulation, unprecedented federal spending and bailouts, plus the government’s attempt at running the health care and energy sectors of our economy. Loose monetary policy threatens higher inflation down the road.
A lackluster recovery is not an economic rule. It’s bad public policy that derails the economy and restrains recovery.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.