After the Great Recession, there's no Great Recovery

A UCLA report says growth just isn't strong enough to 'for the national economy to truly recover.'

By Bruce Kennedy Jun 5, 2013 3:07PM

Statistics arrow in three dimensions (© Polka Dot, Jupiter, Getty)For all the talk of economic recovery, you'd be hard-pressed to find someone who believes that across the entire financial spectrum the U.S. is doing anything but creeping away from the Great Recession.

And now analysts at UCLA's Anderson School of Management are casting some new doubts about whether this baby-step recovery has any real momentum.

In its second quarterly report for the year, the Anderson Forecast says despite "improvement in both GDP and key economic sectors, the overall growth falls short of the rates required for the national economy to truly recover from the most recent recession."

Anderson Forecast director Edward Leamer's essay "Great Recovery: Wherefore Are Thou" says the current economy is caught in a paradox: Yes, jobs are being created, he says. But not rapidly enough, and the jobs available can't ensure a worker's financial security.

At the same time, the lukewarm GDP growth isn't helping America's fundamental economic challenges. Plus, factors like the sequester's mandatory cuts in federal spending are going too far too fast, says IMF head Christine Lagarde, and creating "self-inflicted fiscal wounds."

Also complicating matters are issues like workers' overall lack of skills needed to compete in a global economy or our inability to save -- especially in the face of costly senior health care issues.

"U.S. real GDP is now 15.4% below the normal 3% trend," Leamer writes. "To get back to that 3% trend, we would need 4% growth for 15 years, or 5% growth for eight years, or 6% growth for five years, not the disappointing twos and threes we have been racking up recently, which are moving us farther from trend, not closer to it."

In short, he says: "It's not a recovery. It's not even normal growth. It's bad."

Still, the economy is at least creeping forward. Real GDP, according to the Anderson Forecast, is edging upward. The interest rate banks charge each other for overnight lending remains close to zero -- which in turn keeps long-term interest rates low. And as John Williams, the president and CEO of the Federal Reserve Bank of San Francisco, noted last month, "Those longer-term rates have a lot to do with whether a young family buys a house or a car, or a business builds a new factory."

The unemployment rate, according to the Anderson Forecast, should fall to 6.6% by 2015, although part of that decline will be "due in part to a growing base of discouraged workers dropping out of the labor force."

The real bright spot on the economic landscape, Leamer says, is housing. He expects housing starts to be back at a normal 1.5 million annual pace by 2015.

All this raises a question: Is this limping recovery the start of a new economic normal?

More on moneyNOW

Jun 5, 2013 5:08PM
Truer words were never spoken.  I think we're standing in quicksand and don't know it yet!
Jun 5, 2013 5:44PM
I think that the Fed's tampering has caused synthetic growth in the finance industry and corporate America which has counter balanced poor consumer demand that is caused by the state of the American laborer.  Employment is terrible.  We lost many middle class wage paying jobs and replaced them with low wage jobs or did not replace them at all. Corporations have cut costs by laying off employees, augmenting operating efficiencies, hoarding cash, and taking advantage of the historically low interest rates.  Bankers have taken advantage of historically low interest rates.

Consumer demand has been relatively weak and will weaken further because demand can not outpace consumer income after credit card debt and payday loans are no longer viable as a means to buy things we don't need. Consumer spending is 70% of the US economy.  Yet the US economy is led by the corporate sector.  The Fed's bond buying program needs to stop.  When it does, America will feel the pain of very high interest rates.  Then corporate America and Wall Street might come back to reality. They will be forced to wake up when they can't rely on the low interest rates that most Americans can not take advantage of.
Jun 5, 2013 9:45PM

Here's how I see things: an economy is doing better when people have a little money in their pockets after the necessary bills are paid to spend on fun things or a vacation. They can splurge on a dinner out, etc.


As a Generation X'er, I am fortunate that my husband and I are gainfully employeed (knock on wood). We pay our bills and have a little left at the end of the month. What we don't do is take vacations, splurge on dinners out, buy expensive clothes or cars. We are currently working on paying down our debt, then paying down our mortgage and saving any money we can. We know Social Security and Medicare won't be there for us, so if we want any quality of life, we must work hard while we are young. I live with a constant feeling of anxiety, knowing that all it will take is "one emergency" to really hurt us financially....and that's not even a "big" emergency. (Please transmission, don't fail me now!)


We have NO confidence in our economy. Employers can fire at will, cut your hours. There seems to be no loyalty. We cannot spend like we have forever, and we sure as hell can't trust the government and media when they say things are getting better.


People have to WAKE UP. Learn to budget. Learn to cook if you can't. Shop at thrift stores, flea markets. Learn to be content with less, make what you have stretch. Things aren't getting better any time soon.

Jun 5, 2013 5:33PM
Any analysis of a weak or lacking recovery from the great recession that doesn't contain a single mention of the Affordable Care Act has no credibility.
Jun 6, 2013 6:19AM
They have it misnamed. It is not the Great Recession. It is The Great Repression - handled dutifully by the present administration, designed to create the proper amount of misery needed to get the masses to believe they are better off with a bigger, stronger government. Hey America. You voted for it. Either we take our medicine, or fight to defend all that our country is about.

Jun 6, 2013 12:33PM
Disney is doing extremely well as more and more flow to their venues. In fact they are evening raising their prices. Disney had a 70% jump in this quarter's operating income as compared to last year.  2012 was a Record year domestically on the Revenue side for Hollywood and this year it's doing pretty darn well. Each time I go out to eat, the best eating venues are Packed.

So sure, some folks are doing bad, but clearly some have never had it so good. Exactly what role the Fed's money printing has outside the Banking Industry is really a Black Hole of unknowns.

Jun 6, 2013 12:22PM
dmek, stated it best, rates that only a handful of folks can take advantage of. However, this Article stating nor Great Recovery is bogus when you think about where so industries were right after the financial Crisis. GM and Chrysler were virtually bankrupt, now both are making money hand over fist. North American Car sales have come roaring back compared to then. Maybe folks haven't heard but their is a FRACKING Boom in America. Tons of jobs there and the new and improve American Auto Industry is back to hiring and working overtime.

Big Oil never had a Great Recession as they have gouged us with little shame. Regardless of supply, they get to name the price, and not the Laws of Supply and Demand. Big Banks are also again making Money hand over Fists, thanks to Uncle Ben. Corporate Balance Sheets have never been better. Problem is they prefer to keep it only for the top executives while the Rest of America get's leftover crumbs. It's not the greatest Recovery due to Corporations refusing to Pay a Living Wage. Congress nor the White House controls Corporations, Corporations control them.

Jun 5, 2013 10:01PM
"Also complicating matters are issues like workers' overall lack of skills needed to compete in a global economy or our inability to save"
Having kids go to college and forcing liberal arts as a requirement will do that to you.  Instead of having "well rounded students" who know about useless subjects like history, women's studies, and astronomy; have them major in something like engineering, programming, algorithms, etc.  
You people are ****ed up for sending all those kids to college and having them graduate with some advanced high school degree in liberal arts; only to realize you're all in debt and can't take care of yourselves.  
From day one, I knew sending kids to college was full of **** and you'd all be burned by student loans.  Now what!?  Don't come asking me for money.  I told you liberal arts was a useless **** study.
Now tuition prices are over inflated, people are still dumb, and there is still a widespread of unemployment.  They'll just get older and creepier.  
I thought college was here to help people get jobs; but it doesn't.  That's the ****ing problem.
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