Good monetary policy. Bad monetary policy. Good presidents. Bad presidents. Good regulations. Bad regulations. Special interests. Corruption. Malfeasance. Ineptitude. War.
The graph shows a history of US business cylces since 1929 (but missing the slight uptick that will occur for 2010). Really. They are there. Look real hard. You can see ’em.
12 thoughts on “A brief history of recessions”
What is the real income per capita in the US?
In 1929, the Gross Domestic Product (GDP) was $997 billion (in 2005 dollars). With a population of 121.9 million, the economy generated $8,016 per person. By 2008, the GDP was $13.3 trillion, a per capita GDP of $43,714 (once again, in 2005 dollars). Pretty impressive performance.
A good antidote to pessimism!
You are such an optimist Sven! I’m glad there are people like you out there. As I’ve said before, I’m a long-term optimist – but I’m certainly a lot more pessimistic in the short-term, especially on issues of personal freedom and our ability to control our own destiny and keep the fruits of our labors.
I actually wouldn’t call myself an optimist. I’m just looking at the data with a bigger picture. We are too interested in comparing ourselves to what happened yesterday.
Many fans of Reaganomics like to point to the late 80s as a golden age of economic performance. But even in the depressed economy of 2009, real output of the economy was approximately 70% higher (somewhat less in per capita terms) than when Reagan left office. And, even if you had the same income now as in 1989, would you like to go back and buy a car, a stereo, or a computer in January of 1989? Would you rather visit a 1989 cardiologist, or one in 2009?
I’m not being optimistic. Just keeping things in perspective.
Sven, you’re spreading way too much sunshine on my rainy parade!
An honest question, however: Do you think these data imply, or suggest, that similar upward trends will continue indefinitely into the future, more or less regardless of who we put into office or what fiscal policies we adopt? I am assuming the graph is meant to suggest “yes” to that. But it seems unrealistic to me, if for no other reason than the net present value of the public debt to GDP ratio is worse than it has been since WWII.
I’d like to have your optimism, but I’m too worried about the debt. Do you think I’m unduly worried about the debt?
I sense a debate coming on Ricardian equivalence. Ooooh. Can’t wait to see the rumble on that!
I think that the trend we are going to see for the next 80 years will look fairly similar to the last 80 years.
I don’t like high debt levels either and I think we have reasons to be very concerned. But do the following exercise: Cover up the X-axis and see if you can find WWII.
I want us to pursue pro-growth policies, and Obama is doing a terrible job at this. But the graph in this post is not, fundamentally, a history of policy; it is a history of technology. I see no reason to think we are reaching the end of the technological explosion.
[At a deeper level it is about policy of course–meaning choosing robust democratic capitalism over, say, communism or mercantalism]
And I think you could ask a Bastait like question about the seen and the unseen. Unless we want to engage in Whig history, one could argue that we could have done even better economically if our policies (less drag from unproductive/ineffiecient spending and regulation) and values (less drug use, more human capital development) were better and less destructive of wealth.
I think we who favor less government would have to make this case – otherwise couldn’t someone claim that the government we have had (not our ideal) is causal to this feel-good story (including the vast expansion of the federal government).
I wouldn’t argue with either the proposition that we could have done better or that we could have done worse.
“At a deeper level it is about policy of course–meaning choosing robust democratic capitalism over, say, communism or mercantalism.”
But are you sure it wouldn’t be possible to produce a chart also showing a steady growth curve under one of those systems? My guess is that if you chose the right time frame for, say, China, you could make a chart that shows communism (or at least “authoritarian capitalism”) is compatible with equally or even more impressive leaps in prosperity. Deep or shallow, the chart may not tell us anything about policy.