When pressed to explain why the US recovery in the last three years has fizzled in comparison to other post-WWII US recoveries, especially in job creation, Barack Obama usually says that the Great Recession was such an unusual event that it cannot be directly compared to any other American recovery. In the 2008 crash, unlike other cyclical recessions, financial institutions suffered extensive damage and a large drop in assets, making recovery more difficult. While that may be a singular event for the US, it’s not the first time that kind of crash has occurred in Western nations. James Pethokoukis and JP Morgan compare the Obama recovery to those of other nations after similar financial-sector crashes, and find that our recovery has performed worse than all of them — even Japan’s notorious “lost decade”:
In a new research note, JPMorgan points out that since 1970, Japan, Finland and Sweden have all gone through what the U.S. is currently going through. And all three of them had recoveries stronger than America’s. The above chart compares the economic recovery — as measured by real GDP per capita — of each nation at different points after the trough of their recessions. And the U.S. is in dead last after 12 quarters from the bottom.
You should particularly note how the U.S. is doing versus Japan, another large, advanced economy. As JPMorgan economist Michael Feroli notes:
The poster child for slow growth coming out of a debt-fuelled financial crisis has to be Japan, which ever since the early 1990s has had trouble getting a head of steam. The recession which kicked off Japan’s “lost decade” lasted from 1991 to 1993. Including the recovery experience from that recession is sobering: we are currently faring worse than Japan at the same point in their lost decade.
Be sure to check the chart at AEI that Jim provides; it doesn’t add anything to the analysis, but it does show how far off the mark we currently are from even Japan.
With that in mind, take a look at the new ad for Mitt Romney that is now running in Ohio, as Obama makes a campaign stop today in the state, reminding Buckeye State voters how well Obama’s plan has worked:
Time for a change? If we don’t want to keep doing worse than Japan’s “lost decade,” yes.