Recession Recovery Periods Taking Longer

Posted by admin on August 23, 2010 under Uncategorized | Read the First Comment

The following graph from www.calculatedriskblog.com provides a comparison of the current challenges relative to recessions since WWII. Three points are notable: 1) the Great Recession was still gaining momentum on the downside as most past recessions were in recovery; 2) the two prior recessions (1990 and 2001) had the longest periods of recovery as measured by the time to recoup the jobs lost in the recession, and 3) the great recession has earned it’s name relative to modern history.

Why these changes in recovery times? The three most likely explanations are 1) gains in productivity from technology and capital investment displacing jobs, 2) globalized production of manufactured goods, and even services, and 3) a lack of new investment and consumption opportunities to drive the economy.

When the elongated recovery times are combined with the longest post-WWII expansion that we experienced in the 1990′s. it appears the business cycle itself is getting longer.