Why is the US Recovery the Worst Compared to Other Countries?

Why is the US Recovery the Worst Compared to Other Countries?

The financial crisis of 2008 did not affect only the US; Europe and Asia also suffered severe recessions, or "great recessions". Since then there has been a recovery worldwide, and we can monitor the strength of the recovery. The bottom of the crisis was in the fall of 2008, about 13 quarters ago. How much improvement has there been?

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. At the lowest point of the crisis, we set the GDP per capita index to the value 100, for each country. The above chart shows how this index has fared in Finland, Sweden, Japan, and the US, for the recessions in each country, showing that the US by far had the worst recovery of the four countries.

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 U.S. recovery is doing worse than all of them. The U.S. recovery is in dead last place after 12 quarters from the bottom.

The U.S. recovery vis a vis Japan, another large, advanced economy, is of particular interest.

The poster child for slow growth coming out of a debt-fuelled financial crisis indubitably is Japan, which ever since the early 1990s has had trouble getting GDP growth going again. The recession which kicked off Japan’s “lost decade” lasted from 1991 to 1993. Yet even compared to that awful recovery experience from that recession in Japan is sobering: we are currently faring even worse than Japan at the same point in their lost decade. The US is worse than the worst economy in the world since 1991.

Why is this?

The answer is the policies of the Obama administration, which have been hostile to business, have increased government spending egregiously, have increased government debt by unprecedented amounts, and which have no clue as to what to do. Obama knows only the mantra of higher taxes, more borrowing from future generations, and ultimately, more inflation as Bernanke helicopters in more money, generated out of thin air.

So is the U.S. headed for a Lost Decade (or more) of weak growth, too?

For sure, if Obama is re-elected. If Romney is elected, this remains to be seen.