Stanford’s Lazear: US Suffering Worst Economic Recovery in History

Tuesday, 03 Apr 2012 07:27 AM

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The United States is experiencing its worst recovery in U.S. history thanks to excessive regulations and punitive taxes, writes Edward Lazear, a former economic adviser to President George W. Bush and Stanford professor.

Economies normally snap back when recovering from recessions, but that hasn't been the case this time around.

From 1947 to 2007, the average annual growth rate for the U.S. was 3.4 percent, Lazear writes in a Wall Street Journal opinion piece.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did

Since the recovery began from the Great Recession, growth has averaged 2.4 percent, Lazear adds, citing National Bureau of Economic Research data.

While many argue the financial nature of the recent recession means recovery should be slow, other recoveries stemming from similar downturns in the past didn't go as tepidly as today.

Even the Great Depression saw stronger snapbacks between downturns.

"Threats of higher taxes, the constantly increasing regulatory burden, the failure to pursue an aggressive trade policy that will open markets to U.S. exports, and the enormous increase in government spending all are growth impediments," writes Lazear,  who was chairman of the President's Council of Economic Advisers from 2006-2009.

"Policies have focused on short-run changes and gimmicks — recall cash for clunkers and first-time home buyer credits — rather than on creating conditions that are favorable to investment that raise productivity and wages," writes Lazear, now a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow.

Meanwhile, the U.S. economy is showing signs of improvement.

Recently, the Thomson Reuters/University of Michigan's consumer sentiment index for March rose to 76.2, the highest since February 2011, and surpassing analysts' expectations.

The Commerce Department recently reported that personal spending rose 0.8 percent in February, the most in seven months and above expectations, while factory output is showing improvement as well, with the Institute for Supply Management reporting that its manufacturing index rose to 53.4 in March from 52.4 in February, also beating expectations.

Still, unemployment rates remain well above pre-crisis levels at 8.3 percent, a level Federal Reserve Chairman Ben Bernanke deems unacceptable, hinting rates will stay low and the Fed will remain vigilant.

"Further significant improvements in the unemployment rate will likely require a more rapid expansion of production and demand from consumers and businesses, a process that can be supported by continued accommodative policies," Bernanke told the National Association for Business Economics, according to a copy of his speech.

One snag facing economic recovery has been workforce mobility.

Often individuals or families in the U.S. are willing to pick up and move across the country in search of work, but many cannot since they owe more on their homes than they are worth or do not have the necessary skills needed to land a job after being out of work for so long.

The percentage of people who changed residences between 2010 and 2011 came to 11.6 percent, the lowest recorded rate since the Current Population Survey began collecting statistics on the movement of people in the United States in 1948, according to U.S. Census Bureau data.

The rate, which hit 20.2 percent in 1985.

Meanwhile, the country today is showing a little nostalgia for its recession-era past, when families packed up and headed out West in search of the better times.

Interest in newly released 1940 U.S. Census information has been so hot that users flocking to the National Archives site to learn more about their family history have paralyzed the site just after the records went public for the first time.

Officials from the U.S. National Archives told The Associated Press that the site registered more than 22 million hits in just four hours on Monday.

Editor's Note: Economist Unapologetically Calls Out Bernanke, Obama for Mishandling Economy. See What They Did



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