After my last post (No double dip, 29 October 2010) , the question was raised about whether the Great Recession has been more severe and long-lasting than any other capitalist economic slump since the war – and also whether the recovery has been weaker and slower than previous recoveries.
So I looked at the data for the US and the UK. What the quarterly real GDP figures show is that, during the Great Recession, US national output actually declined less than in the economic slumps of 1973-75 and 1980-83 for the first two quarters after the point at which national output peaked. However, after that, there was a steep contraction in output for four quarters.
In contrast, in the ‘double-dip’ slump of 1980-82, US GDP rose back to a new peak over the next four quarters, before dipping back again. In 1973-75, the slump was more like the Great Recession, although it reached a trough after five quarters, not six as in the Great Recession, and then the economy recovered much faster than in 1980-83 or in the Great Recession. Indeed, the US economy surpassed its peak before the slump in 1973-75 within eight quarters, while in 1980-83, the US economy had still not got back to it previous peak after nearly three years.
The Great Recession cycle has been as drawn out as 1980-83. So far, after eleven quarters, the US economy has still not got back to it previous peak. But the recovery from the trough in the Great Recession has been quicker than in 1980-83, at least so far – because there has not been a double dip.
In the UK, the outcomes of the various economic recessions were different fromthe US. The Great Recession has seen the steepest and longest decline in UK national output, falling over 6% from its peak and taking six quarters to reach its trough. In 1980-82, the decline was 4.5% and troughed after five quarters. In 1974-75, the fall was just 3% within three quarters, although the recovery then was different from the US, because the UK suffered a double-dip and the previous peak was not reached until three years were up. It took just as long in 1980-82. So far, the Great Recession is much slower and weaker in its recovery in the UK and so surpassing the previous peak could take even longer than in the 1970s and 1980s!
In sum ,the data show that the Great Recession was indeed the most severe of all the capitalist economic slumps since 1945 in both the US and the UK. But the recovery in the US since mid-2009 has actually been better than in 1980-82, which suffered a double dip. In the UK, the recovery has been slightly weaker so far than in previous UK economic recessions.