A funny thing happened on the way to “this country’s going down the tubes!”
It didn’t.
In case you haven’t noticed, we are in another one of those America-stands-alone moments, at least in terms of our economic strength, (notwithstanding a weakish jobs report for March.) I say moments because it won’t last forever. It’s a state that always comes and goes. But compared to where we were? What a difference seven-and-a-half years makes!
I think there are two basic reasons why we were able to bounce back from the depths of the Great Recession. First—and this may be very difficult for you to swallow—Washington worked. Starting with President George W. Bush and Treasury Secretary Paulson who first implemented the massive bailouts (Nixon goes to China, anyone?) and then to President Obama, T-Secs Geithner and Lew, as well as Fed Chiefs Bernanke and now Yellen, plus dozens of other federal bureaucrats.
I know it’s a blood sport to bash these guys, but guess what? They saved our bacon. Unassailably true, full stop. How do I know? Two ways: First, we didn’t slip into the Great Depression Part Deux because we stimulated the economy instead of pulling in the reins like we did in the 1930s. The other way that I know Washington’s strategy worked is by comparing the U.S. to the eurozone which pursued a much more hawkish monetary policy and is now suffering the consequences. GDP growth in eurozone last checked in at 0.9% versus 2.2% in the U.S., while unemployment there is 9.8% versus 5.5% here. Yes, there are other things in play, but still.
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Now it may be the case, as U.S. hawks suggest, that the Fed has been too accommodating here (and that the Europeans are right), but we won’t really know if that’s true for, say, another half decade. There are also those on the left who argue that the Fed should ease more, which is hard to fathom now. In any event, if both the left and the right are beating you up, you may well be in just the right spot. Again, we will see.
Treasury Secretary Lew articulated the other reason we are in better relative shape than the rest of the world in an interview at the Long-Term Value Summit in New York last month. Lew pointed to the U.S. economic system itself as a primary cause of our recovery, in that it is the strongest, most flexible and most resilient in the world. These factors aid greatly in recovery as they allow confidence to rebuild more quickly than in a more fragile economy hit by a downturn.
So, yes, the recovery has been a long time coming and could be stronger. We still need to create more jobs and the March jobs report could spell trouble (or not.) We need wages to climb more (though they seem to be). But compare us, and your own circumstances I hope, to the state of other countries and citizens around the world. Or compare the U.S. now to the 1930s. On an absolute basis, things are never good enough. On a relative basis, things aren’t so bad.
So take a bow Washington. You deserve some credit.
