Quite a few people have had the same reaction to this chart from Business Insider and Calculated Risk as John Derbyshire at The Corner, which is to offer a res ipsa loquitur rather than clutter it with commentary. But there is more to be said about the ramifications of this chart:
But calling it the Chart of the Day seems too limiting. I’d call this the Chart of the Year, for a couple of reasons. It demonstrates the folly of the Obama administration’s insistence that we have been experiencing a recovery and any sort of significant growth in job creation. After hitting the nadir of job losses relative to our peak inter-recession employment, we have essentially flatlined for far longer than any other post-recession period. Nothing in the data shows a hint that we will soon break out of that pattern either, and Ben Bernanke says we’ll probably go four to five more years on this same trajectory.
In previous recessions, we had three essential tools to encourage recovery: monetary policy, tax policy, and regulatory policy. The first has vanished; our monetary policy has become more loose than practically any other time, with Fed credit practically free at the moment and QE2 printing even more money. The only way to encourage investment at this point is through tax and regulatory policy. Unfortunately for us, the current administration has taken actively hostile positions against business in both areas, heaping regulatory additions onto threats to hike taxes and close loopholes, some of which allows American businesses to compete abroad while nominally remaining in the highest corporate-tax environment in the industrialized world. At the same time, the federal government plans to continue increasing spending and national debt, undermining the dollar and making the investment environment even less stable.
That’s the reason Bernanke feels compelled to move forward with QE2, even though monetary policy has all but been played out. Nothing else is happening, and until we start using the other tools in the toolbox to recharge economic growth, it won’t happen for a very long time.