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Defining Recovery Down

On Friday, we learned that the annualized GDP growth rate in the fourth quarter was 2.8 percent. The press coverage the following days portrayed this news as encouraging. It wasn’t. The Great Recession officially ended in the middle of 2009; for the last quarter of 2011 to produce a growth rate less than 3.0 percent is evidence of a very weak economy. (Historically, the deeper the recession, the stronger the recovery.) Indeed, the GDP increase for all of 2011 was a Lost Decade-like 1.7 percent. We lost ground from 2010, which itself was a relatively sickly year (GDP grew only 3.0 percent).

As a point of comparison, this editorial points out that once the Reagan recovery began in earnest in 1983, growth stayed above 5 percent for 18 months and never fell below 3.3 percent for 13 consecutive quarters. In the Obama years, on the other hand, growth has never exceeded 4 percent in any quarter.

For anyone to be encouraged by our latest GDP figures is evidence that, to paraphrase a formulation once used by Daniel Patrick Moynihan, we’re Defining Recovery Down.